Say on pay laws, executive compensation, pay slice, and firm valuation around the world

Ricardo Correa and Ugur Lel

Journal of Financial Economics, 2016, vol. 122, issue 3, 500-520

Abstract: Using a large sample of firms from 38 countries over the 2001–2012 period, this study finds evidence that, following the adoption of say on pay (SoP) laws, chief executive officer (CEO) pay growth rates decline and the sensitivity of CEO pay to firm performance improves. These changes are concentrated in firms with high excess pay and shareholder dissent, long CEO tenure, and less independent boards. Further, the portion of top management pay captured by CEOs is lower in the post-SoP period, which is associated with higher firm valuations. Overall, these results suggest that SoP laws are associated with significant changes in CEO pay policies.

Keywords: Executive compensation; Say on pay laws; Regulations; CEO pay slice; Firm valuation (search for similar items in EconPapers)
JEL-codes: G15 G34 G38 M12 (search for similar items in EconPapers)
Date: 2016
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (46)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:jfinec:v:122:y:2016:i:3:p:500-520

DOI: 10.1016/j.jfineco.2016.09.003

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