Say pays! Shareholder voice and firm performance

Cuñat, Vicente, Giné, Mireia and Guadalupe, Maria (2015) Say pays! Shareholder voice and firm performance. Review of Finance, 20 (5). pp. 1799-1834. ISSN 1572-3097

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Abstract

This paper estimates the effects of Say-on-Pay (SoP), a policy that increases shareholder "voice" by providing shareholders with a regular vote on executive pay. We apply a regression discontinuity design to the votes on shareholder-sponsored SoP proposals. Adopting SoP leads to large increases in market value (5%) and to improvements in long-term profitability. In contrast, it has limited effects on pay levels and structure. Taken together our results suggest that SoP can be seen as a repeated regular vote of confidence on the CEO and that it serves as a disciplining device.

Item Type:	Article
Official URL:	http://rof.oxfordjournals.org/
Additional Information:	© 2015 The Authors
Library of Congress subject classification:	H Social Sciences > HG Finance
Journal of Economic Literature Classification System:	G - Financial Economics > G1 - General Financial Markets > G14 - Information and Market Efficiency; Event Studies G - Financial Economics > G3 - Corporate Finance and Governance > G30 - General G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance G - Financial Economics > G3 - Corporate Finance and Governance > G38 - Government Policy and Regulation J - Labor and Demographic Economics > J3 - Wages, Compensation, and Labor Costs > J33 - Compensation Packages; Payment Methods L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L25 - Firm Performance: Size, Diversification and Scope, Age, Profit, and Sales
Sets:	Departments > Finance Collections > Economists Online Research centres and groups > Financial Markets Group (FMG)
Project and Funder Information:	Project ID Funder Name Funder ID UNSPECIFIED W.E. Upjohn Institute for Employment Research http://dx.doi.org/10.13039/100001366 ECO2011-24928 Spanish Government UNSPECIFIED ECO2010-17158 Spanish Government UNSPECIFIED UNSPECIFIED Banc Sabadell UNSPECIFIED UNSPECIFIED Bank of Spain’s Program of Excellence in Research UNSPECIFIED
Projects:	ECO2011-24928, ECO2010-17158
Funders:	W.E. Upjohn Institute for Employment, Spanish Spanish, Banc Sabadell, Bank of Spain's Program of Excellence in Research
Date Deposited:	26 Aug 2015 13:06
URL:	http://eprints.lse.ac.uk/63331/

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