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 Cuñat & Mireia Giné & Maria Guadalupe, 2013. "Say pays! Shareholder voice and firm performance," LSE Research Online Documents on Economics 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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