What Does the Market Say About Say on Pay? A Look at the Canadian Bank Experience

12 Pages Posted: 26 Oct 2011  

Kim Trottier

Simon Fraser University

Date Written: May 13, 2011

Abstract

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

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

Kim Trottier (Contact Author)

Simon Fraser University ( email )

8888 University Drive
Burnaby, British Columbia V5A 1S6
Canada

HOME PAGE: http://business.sfu.ca/profiles/KimTrottier

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