Say Pays! Shareholder Voice and Firm Performance

Vicente Cuñat, Mireia Giné () and Maria Guadalupe ()
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Mireia Giné: Wharton School, University of Pennsylvania

No 8538, IZA Discussion Papers from Institute of Labor Economics (IZA)

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 (4%) and to improvements in long-term performance: profitability and labor productivity increase, while overheads and investment fall. In contrast, we find limited effects on pay levels and structure. This suggests that SoP serves as a regular vote of confidence on the CEO, which leads to higher efficiency and market value.

Keywords: executive compensation; corporate governance; say-on-pay (search for similar items in EconPapers)
JEL-codes: G34 M52 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2014-10
New Economics Papers: this item is included in nep-eff and nep-hrm
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Published - published in: Review of Finance, 2016, 20 (5), 1799 - 1834

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https://docs.iza.org/dp8538.pdf (application/pdf)

Related works:
Journal Article: Say Pays! Shareholder Voice and Firm Performance (2016)
Working Paper: Say pays! Shareholder voice and firm performance (2016)
Working Paper: Say Pays! Shareholder Voice and Firm Performance (2014)
Working Paper: Say pays! Shareholder voice and firm performance (2013)
Working Paper: Say Pays! Shareholder Voice and Firm Performance (2013)
Working Paper: Say Pays! Shareholder Voice and Firm Performance (2013)
Working Paper: Say Pays! Shareholder Voice and Firm Performance (2013)
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