Executive compensation, financial performance and say on pay votes
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The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 was passed as a response to the late-2000s recession. A shareholder opt-in executive pay vote was introduced as a solution to the managerial power problem. We examine the results of this recommended solution and prove its viability. We find that there is a stronger association between high CEO pay and low say-on-pay vote support for firms with negative financial performance. We also find the market-to-book ratio is significantly lower for companies that failed say-on-pay votes. Furthermore, regulated industries such as financial services are more likely to receive unfavourable say-on-pay votes. We document an increase in the sensitivity of CEO pay to poor performance. Overall, these finds are consistent with calls for less “rewards for failure” that led to the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Article History
How to Cite
Yuan, X., Lin, W., & Oriaku, E. A.. (2017). Executive compensation, financial performance and say on pay votes. International Journal of Business and Economic Development, Volume 05 Issue 1.
Citation Context
APA
Yuan, X., Lin, W., & Oriaku, E. A.. (2017). Executive compensation, financial performance and say on pay votes. International Journal of Business and Economic Development, Volume 05 Issue 1.
MLA
Yuan, Xiaoli, et al.. "Executive compensation, financial performance and say on pay votes." International Journal of Business and Economic Development, Volume 05 Issue 1, 2017.
Chicago
Xiaoli Yuan, Wenguang Lin, and Ebere A. Oriaku. "Executive compensation, financial performance and say on pay votes." International Journal of Business and Economic Development Volume 05 Issue 1 (27 Mar 2017).
Harvard
Yuan, X., Lin, W., & Oriaku, E. A. (2017) Executive compensation, financial performance and say on pay votes. International Journal of Business and Economic Development, Volume 05 Issue 1
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