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Management Influence on Investors: Evidence from Shareholder Votes on the Frequency of Say on Pay

Listed author(s):
  • Ferri, Fabrizio

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  • Oesch, David

    ()

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    The literature on shareholder voting has mostly focused on the influence of proxy advisors on shareholder votes. We exploit a unique empirical setting enabling us to provide a direct estimate of management’s influence. Analyzing shareholder votes on the frequency of future say on pay votes, we find that a management recommendation for a particular frequency is associated with a 26% increase in voting support for that frequency. Additional tests suggest that the documented association is likely to capture a causal effect. Management influence varies across firms and is smaller at firms where perceived management credibility is lower. Compared to firms adopting an annual frequency, firms following management’s recommendation to adopt a triennial frequency are significantly less likely to change their compensation practices in response to an adverse say on pay vote, consistent with the notion that a less frequent vote results in lower management accountability.

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    File URL: http://ux-tauri.unisg.ch/RePEc/usg/sfwpfi/WPF-1329.pdf
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    Paper provided by University of St. Gallen, School of Finance in its series Working Papers on Finance with number 1329.

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    Length: 63 pages
    Date of creation: Oct 2013
    Handle: RePEc:usg:sfwpfi:2013:29
    Contact details of provider: Phone: +41 71 243 40 11
    Fax: +41 71 243 40 40
    Web page: http://www.unisg.ch/de/universitaet/schools/finance

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