12 Pages Posted: 26 Oct 2011
Date Written: 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.
Keywords: Corporate Governance, Executive Compensation, Event Study, Canada, Agency Theory
Suggested Citation: Suggested Citation
Trottier, Kim, What Does the Market Say About Say on Pay? A Look at the Canadian Bank Experience (May 13, 2011). Available at SSRN: https://ssrn.com/abstract=1840673 or http://dx.doi.org/10.2139/ssrn.1840673