Do “say-on-pay” votes affect M&A decisions?

Shantanu Dutta, Micah S. Officer, Ruixiang Wang and Pengcheng Zhu

Journal of Corporate Finance, 2025, vol. 91, issue C

Abstract: This paper demonstrates that firms receiving above-industry-average support in their “say-on-pay” (SoP) votes engage in more M&A transactions in the subsequent year. Our empirical findings suggest that high levels of SoP voting support may boost managerial confidence, thereby stimulating increased pursuit of acquisitions. Moreover, we observe that managers garnering higher SoP vote support are more likely to secure shareholders' backing in M&A votes, receive higher compensation in successful deals, and face a reduced likelihood of forced turnover following unsuccessful deals. Additionally, we find that both short-term and long-term M&A performance significantly improves in deals announced by managers receiving higher SoP voting support. These findings contribute to our understanding of the relation between shareholder support for CEOs and firm investment.

Keywords: Say on pay; Mergers and acquisitions; Managerial confidence, corporate governance (search for similar items in EconPapers)
JEL-codes: G34 G38 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:corfin:v:91:y:2025:i:c:s092911992500001x

DOI: 10.1016/j.jcorpfin.2025.102733

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