Management Influence on Investors: Evidence from Shareholder Votes on the Frequency of Say on Pay

Item Type Monograph (Working Paper)

The literature on shareholder voting has mostly focused on the influence of proxy advisors on shareholder votes. We exploit a unique empirical setting enabling us to provide a direct estimate of management's influence. Analyzing shareholder votes on the frequency of future say on pay votes, we find that a management recommendation for a particular frequency is associated with a 26% increase in voting support for that frequency. Additional tests suggest that the documented association is likely to capture a causal effect. Management influence varies across firms and is smaller at firms where perceived management credibility is lower. Compared to firms adopting an annual frequency, firms following management's recommendation to adopt a triennial frequency are significantly less likely to change their compensation practices in response to an adverse say on pay vote, consistent with the notion that a less frequent vote results in lower management accountability.

Authors Oesch, David & Ferri, Fabrizio
Language English
Keywords Say on pay, say when on pay, shareholder votes, management influence, CEO compensation, shareholder activism
Subjects business studies
HSG Classification contribution to scientific community
Refereed No
Date 2013
Publisher SoF - HSG
Place of Publication St. Gallen
Series Name School of Finance Working Paper Series
Number 2013/29
Depositing User David Oesch
Date Deposited 19 May 2014 09:26
Last Modified 19 May 2014 09:26


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Oesch, David & Ferri, Fabrizio: Management Influence on Investors: Evidence from Shareholder Votes on the Frequency of Say on Pay. School of Finance Working Paper Series, 2013, 2013/29.

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