What Does the Market Say About Say on Pay? A Look at the Canadian Bank Experience
Simon Fraser University
May 13, 2011
This paper explores the share price reaction to a recent news announcement that Canadian banks were adopting say-on-pay, a policy that gives shareholders an annual non-binding vote on executive compensation. Using event study methodology, the effect of adopting this new policy is explored and found to be associated with a significant increase in share price. This result suggests that giving shareholders a voice on executive compensation is expected to generate economic benefits, which adds to the paucity of knowledge currently available to shareholders and legislators as they consider the consequences of say-on-pay.
Number of Pages in PDF File: 12
Keywords: Corporate Governance, Executive Compensation, Event Study, Canada, Agency Theory
Date posted: October 26, 2011
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