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Say on Pay Laws, Executive Compensation, Pay Slice, and Firm Valuation around the WorldRicardo CorreaBoard of Governors of the Federal Reserve System Ugur LelUniversity of Georgia - Department of Banking and Finance January 20, 2016 Journal of Financial Economics (JFE), Forthcoming Abstract: Using a large sample of firms from 38 countries over the 2001-2012 period, we find evidence that following say on pay (SoP) laws, CEO pay growth rates decline and the sensitivity of CEO pay to firm performance improves. These changes are mostly concentrated on firms with high excess pay and shareholder dissent, long CEO tenure, and busy and less independent boards as of the period prior to the adoption of SoP laws. Further, the portion of total top management pay captured by CEOs is lower in the post-SoP period, which is associated with higher firm valuations. Overall, these results suggest that SoP laws are associated with significant changes in CEO pay policies.
Number of Pages in PDF File: 57 Keywords: Executive compensation, say on pay laws, regulations, CEO pay slice, corporate governance, firm valuation, international. JEL Classification: G15, G34, G38, M12 Date posted: April 28, 2014 ; Last revised: August 17, 2016Suggested CitationContact Information
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