IDEAS home Printed from https://ideas.repec.org/p/ecl/stabus/1679.html
   My bibliography  Save this paper

An Empirical Analysis of the SEC's 1992 Proxy Reforms on Executive Compensation

Author

Listed:
  • Johnson, Marilyn F.

    (Michigan State U)

  • Nelson, Karen K.

    (Stanford U)

  • Shackell, Margaret B.

    (U of Notre Dame)

Abstract

We examine the SEC's 1992 proxy reforms that expanded the amount of information about executive pay that is required to be disclosed in corporate proxy statements and permitted shareholders to file proxy proposals about executive compensation. Using a sample of executive compensation proposals filed against 64 firms during 1992-1995. We find that the stock market reaction to the reforms suggest that they imposed significant political costs on firms, without offsetting benefits to shareholders in the form of improved monitoring. We also find that the proposal filing decision primarily reflects populist political concerns about pay policies, but that voting outcomes primarily reflect shareholder concerns about the degree of incentive alignment provided by the firm's compensation contracts.

Suggested Citation

  • Johnson, Marilyn F. & Nelson, Karen K. & Shackell, Margaret B., 2001. "An Empirical Analysis of the SEC's 1992 Proxy Reforms on Executive Compensation," Research Papers 1679, Stanford University, Graduate School of Business.
  • Handle: RePEc:ecl:stabus:1679
    as

    Download full text from publisher

    File URL: http://gsbapps.stanford.edu/researchpapers/library/RP1679.pdf
    Download Restriction: no

    References listed on IDEAS

    as
    1. DeAngelo, Harry & DeAngelo, Linda, 1991. "Union negotiations and corporate policy *1: A study of labor concessions in the domestic steel industry during the 1980s," Journal of Financial Economics, Elsevier, vol. 30(1), pages 3-43, November.
    2. Strickland, Deon & Wiles, Kenneth W. & Zenner, Marc, 1996. "A requiem for the USA Is small shareholder monitoring effective?," Journal of Financial Economics, Elsevier, vol. 40(2), pages 319-338, February.
    3. Gordon, Lilli A & Pound, John, 1993. " Information, Ownership Structure, and Shareholder Voting: Evidence from Shareholder-Sponsored Corporate Governance Proposals," Journal of Finance, American Finance Association, vol. 48(2), pages 697-718, June.
    4. Sloan, Richard G., 1993. "Accounting earnings and top executive compensation," Journal of Accounting and Economics, Elsevier, vol. 16(1-3), pages 55-100, April.
    5. Baber, William R. & Janakiraman, Surya N. & Kang, Sok-Hyon, 1996. "Investment opportunities and the structure of executive compensation," Journal of Accounting and Economics, Elsevier, vol. 21(3), pages 297-318, June.
    6. Lewellen, Wilbur G. & Park, Taewoo & Ro, Byung T., 1996. "Self-serving behavior in managers' discretionary information disclosure decisions," Journal of Accounting and Economics, Elsevier, vol. 21(2), pages 227-251, April.
    7. Paul L. Joskow & Nancy L. Rose & Catherine Wolfram, 1996. "Political Constraints on Executive Compensation: Evidence from the Electric Utility Industry," RAND Journal of Economics, The RAND Corporation, vol. 27(1), pages 165-182, Spring.
    8. Bushman, Robert M. & Indjejikian, Raffi J., 1993. "Accounting income, stock price, and managerial compensation," Journal of Accounting and Economics, Elsevier, vol. 16(1-3), pages 3-23, April.
    9. Jensen, Michael C & Murphy, Kevin J, 1990. "Performance Pay and Top-Management Incentives," Journal of Political Economy, University of Chicago Press, vol. 98(2), pages 225-264, April.
    10. Murphy, Kevin J., 1997. "Executive compensation and the Modern Industrial Revolution1," International Journal of Industrial Organization, Elsevier, vol. 15(4), pages 417-425, July.
    11. Karpoff, Jonathan M. & Malatesta, Paul H. & Walkling, Ralph A., 1996. "Corporate governance and shareholder initiatives: Empirical evidence," Journal of Financial Economics, Elsevier, vol. 42(3), pages 365-395, November.
    12. Fama, Eugene F, 1991. "Time, Salary, and Incentive Payoffs in Labor Contracts," Journal of Labor Economics, University of Chicago Press, vol. 9(1), pages 25-44, January.
    13. Steven Huddart, 1993. "The Effect of a Large Shareholder on Corporate Value," Management Science, INFORMS, vol. 39(11), pages 1407-1421, November.
    14. Mikkelson, Wayne H. & Partch, M. Megan, 1988. "Withdrawn Security Offerings," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 23(02), pages 119-133, June.
    15. Choi, Stephen, 2000. "Proxy Issue Proposals: Impact of the 1992 SEC Proxy Reforms," Journal of Law, Economics, and Organization, Oxford University Press, vol. 16(1), pages 233-268, April.
    16. Palepu, Krishna G., 1986. "Predicting takeover targets : A methodological and empirical analysis," Journal of Accounting and Economics, Elsevier, vol. 8(1), pages 3-35, March.
    17. Kim, Oliver & Suh, Yoon, 1993. "Incentive efficiency of compensation based on accounting and market performance," Journal of Accounting and Economics, Elsevier, vol. 16(1-3), pages 25-53, April.
    18. Bushman, Robert M. & Indjejikian, Raffi J. & Smith, Abbie, 1996. "CEO compensation: The role of individual performance evaluation," Journal of Accounting and Economics, Elsevier, vol. 21(2), pages 161-193, April.
    19. Denis, David J & Denis, Diane K, 1995. " Performance Changes Following Top Management Dismissals," Journal of Finance, American Finance Association, vol. 50(4), pages 1029-1057, September.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Arantxa Jarque, 2008. "CEO compensation : trends, market changes, and regulation," Economic Quarterly, Federal Reserve Bank of Richmond, issue Sum, pages 265-300.

    More about this item

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ecl:stabus:1679. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/gsstaus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.