Proxy Voting on CEO Pay: Evidence from Rejection of the Inevitable Disclosure Doctrine

Xiaohui Li Xiaohui Li (), Yao Shen () and Jing Xie
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Xiaohui Li Xiaohui Li: The School of Accounting and Finance, Hong Kong Polytechnic University
Yao Shen: Zicklin School of Business, c, City Univeristy of New York

No 202412, Working Papers from University of Macau, Faculty of Business Administration

Abstract: We find that investors are more negative towards firm management in proxy voting when CEOs have higher job mobility. Specifically, we document an increased dissenting vote against management-sponsored compensation proposals after an exogenous positive shock to CEO job mobility. Consistent with the rent extraction hypothesis, the effect is more pronounced for firms with poor past performance, overpaid CEOs, and weaker corporate governance. Proxy advisors recommend more against firm management after the shock, casting a larger influence on voting outcomes. Moreover, our investor level analysis suggests that larger investors care less about job mobility in their voting.

Keywords: Proxy Voting; Executive Compensation; Labor Market; Proxy Advisor; Mutual Funds (search for similar items in EconPapers)
JEL-codes: G30 G34 J33 M12 (search for similar items in EconPapers)
Pages: 60 pages
Date: 2024-06
New Economics Papers: this item is included in nep-bec, nep-cdm and nep-lma
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Published in UM-FBA Working Paper Series

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