Say Pays! Shareholder Voice and Firm Performance
AbstractThis 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 (4.6%) 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 operates as a regular vote of confidence, increasing efficiency and market value.
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Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 48489.
Date of creation: 19 Jul 2013
Date of revision:
Say-on-Pay; Shareholder Voice; Executive Compensation; Firm Performance; Governance;
Other versions of this item:
- Vicente CuÃ±at & Mireia GinÃ© & Maria Guadalupe, 2013. "Say Pays! Shareholder Voice and Firm Performance," FMG Discussion Papers, Financial Markets Group dp724, Financial Markets Group.
- Vicente CuÃ±at & Mireia GinÃ© & Maria Guadalupe, 2013. "Say pays! Shareholder voice and firm performance," LSE Research Online Documents on Economics, London School of Economics and Political Science, LSE Library 55406, London School of Economics and Political Science, LSE Library.
- Vicente Cunat & Mireia Gine & Maria Guadalupe, 2013. "Say Pays! Shareholder Voice and Firm Performance," Upjohn Working Papers and Journal Articles 13-192, W.E. Upjohn Institute for Employment Research.
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
- L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
- M12 - Business Administration and Business Economics; Marketing; Accounting - - Business Administration - - - Personnel Management; Executives; Executive Compensation
This paper has been announced in the following NEP Reports:
- NEP-ALL-2013-07-28 (All new papers)
- NEP-EFF-2013-07-28 (Efficiency & Productivity)
- NEP-HRM-2013-07-28 (Human Capital & Human Resource Management)
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