The Effect of the Say-on-Pay in the U.S.

Management Science, Forthcoming

47 Pages Posted: 20 Mar 2013 Last revised: 16 Feb 2018

See all articles by Peter Iliev

Peter Iliev

Pennsylvania State University - Department of Finance

Svetla Vitanova

Pennsylvania State University

Date Written: February 8, 2017

Abstract

The Dodd-Frank Act mandated advisory shareholder votes on executive compensation. To isolate the effect of holding a Say-on-Pay vote we use an exemption provided to a group of firms based on their public float. We find that the regulation increased the level of CEO pay and the fraction of performance-linked pay in the companies that had to comply with the new rule. This increase was larger for CEOs who had higher ownership and longer tenure. Moreover, the market reacted negatively to the exemption from the Say-on-Pay rule suggesting general support for holding the Say-on-Pay votes. These effects are not present in placebo specifications in previous years or in different groups.

Keywords: CEO Compensation, Shareholder Voting, Corporate Governance, Say-on-Pay

JEL Classification: G30, G38

Suggested Citation

Iliev, Peter and Vitanova, Svetla, The Effect of the Say-on-Pay in the U.S. (February 8, 2017). Management Science, Forthcoming. Available at SSRN: https://ssrn.com/abstract=2235064 or http://dx.doi.org/10.2139/ssrn.2235064

Peter Iliev (Contact Author)

Pennsylvania State University - Department of Finance ( email )

348 Business Building
University Park, PA 16802
United States

Svetla Vitanova

Pennsylvania State University ( email )

University Park
State College, PA 16802
United States

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