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http://ssrn.com/abstract=1823804
 
 

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Disclosure, Shareholder Oversight and the Pay-Performance Link


Peter Clarkson


University of Queensland - Business School; Simon Fraser University (SFU) - Beedie School of Business; Financial Research Network (FIRN)

Julie K. Walker


University of Queensland - Business School; Financial Research Network (FIRN)

Shannon Nicholls


Morgan Stanley

April 26, 2011


Abstract:     
This paper investigates the effect of increased shareholder oversight and disclosure about executive remuneration on the pay-performance relation, while controlling for contemporaneous changes in corporate governance practice. Our sample consists of 240 ASX-listed firms with annual reports available for each year over the period 2001-2009, a period which straddles the period of regulatory change. We initially document the conjectured improvements in remuneration disclosure and shareholder oversight, in the form of the advisory vote on the remuneration report. Following, we find, as predicted, a general strengthening of the pay-performance relation over the study period, with the increased sensitivity of reported CEO remuneration to firm performance being primarily related to enhanced remuneration disclosure and the non-binding shareholder vote on the remuneration report. Our results lead us to conclude that enhanced oversight over the executive remuneration process brought about by regulatory change has positively impacted the executive remuneration process by strengthening the pay-performance relation and making the process appear more accountable.

Number of Pages in PDF File: 41

Keywords: CEO Remuneration, Pay-Performance Sensitivity, Remuneration Disclosure, Shareholder Remuneration Vote

JEL Classification: M41

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Date posted: April 26, 2011  

Suggested Citation

Clarkson, Peter and Walker, Julie K. and Nicholls, Shannon, Disclosure, Shareholder Oversight and the Pay-Performance Link (April 26, 2011). Available at SSRN: http://ssrn.com/abstract=1823804 or http://dx.doi.org/10.2139/ssrn.1823804

Contact Information

Peter Clarkson (Contact Author)
University of Queensland - Business School ( email )
Brisbane, Queensland 4072
Australia
Simon Fraser University (SFU) - Beedie School of Business ( email )
8888 University Drive
Burnaby, British Colombia V5A 1S6
Canada
Financial Research Network (FIRN) ( email )
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Julie K. Walker
University of Queensland - Business School ( email )
Brisbane, Queensland 4072
Australia
Financial Research Network (FIRN) ( email )
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Shannon Nicholls
Morgan Stanley ( email )
1585 Broadway
New York, NY 10036
United States
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References:  19
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