Say on Pay, Governance Quality, and Shareholder Pressure

48 Pages Posted: 12 Aug 2011 Last revised: 26 Aug 2019

See all articles by Robert F. Göx

Robert F. Göx

University of Zurich - Managerial Accounting; University of Zurich - Faculty of Economics, Business Administration and Information Technology

Date Written: October 1, 2013

Abstract

I examine the economic consequences of Say on Pay (SoP) for firms with different governance qualities in a setting where shareholders face informational constraints in evaluating the efficiency of the firm's compensation policy and where the firm's governance structure is endogenous. I find that the effectiveness of SoP critically depends on the firm's governance quality and its ability to adjust the board structure in response to the new regulation. However, a more effective SoP regime not necessarily benefits shareholders because it equally prevents properly (poorly) governed firms from neutralizing the unintended (intended) consequences of SoP on its compensation policy by nominating a more CEO-friendly compensation committee.

Keywords: Corporate Governance, Compensation Committee, Executive Compensation, Say on Pay, Shareholder Activism.

JEL Classification: G34, G38, K22, M12, M48

Suggested Citation

Goex, Robert F., Say on Pay, Governance Quality, and Shareholder Pressure (October 1, 2013). AAA 2012 Management Accounting Section (MAS) Meeting Paper, Available at SSRN: https://ssrn.com/abstract=1908592 or http://dx.doi.org/10.2139/ssrn.1908592

Robert F. Goex (Contact Author)

University of Zurich - Managerial Accounting ( email )

Plattenstrasse 14
Zurich, CH-8032
Switzerland

University of Zurich - Faculty of Economics, Business Administration and Information Technology ( email )

Plattenstrasse 14
Zürich, 8032
Switzerland

Do you have negative results from your research you’d like to share?

Paper statistics

Downloads
393
Abstract Views
2,940
Rank
137,863
PlumX Metrics