Management Influence on Investors: Evidence from Shareholder Votes on the Frequency of Say on Pay

Fabrizio Ferri () and David Oesch ()

No 1329, Working Papers on Finance from University of St. Gallen, School of Finance

Abstract: The literature on shareholder voting has mostly focused on the influence of proxy advisors on shareholder votes. We exploit a unique empirical setting enabling us to provide a direct estimate of management’s influence. Analyzing shareholder votes on the frequency of future say on pay votes, we find that a management recommendation for a particular frequency is associated with a 26% increase in voting support for that frequency. Additional tests suggest that the documented association is likely to capture a causal effect. Management influence varies across firms and is smaller at firms where perceived management credibility is lower. Compared to firms adopting an annual frequency, firms following management’s recommendation to adopt a triennial frequency are significantly less likely to change their compensation practices in response to an adverse say on pay vote, consistent with the notion that a less frequent vote results in lower management accountability.

Keywords: Say on pay; say when on pay; shareholder votes; management influence; CEO compensation; shareholder activism (search for similar items in EconPapers)
JEL-codes: G34 G38 J33 M12 (search for similar items in EconPapers)
Pages: 63 pages
Date: 2013-10
New Economics Papers: this item is included in nep-bec, nep-cdm and nep-hrm
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Persistent link: https://EconPapers.repec.org/RePEc:usg:sfwpfi:2013:29

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