Management Influence on Investors

Evidence from Shareholder Votes on the Frequency of Say on Pay

Fabrizio Ferri, David Oesch

Research output: Contribution to journalArticle

10 Citations (Scopus)

Abstract

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 (SOP) votes, we find that a management recommendation for a particular frequency is associated with a 26 percent 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 SOP vote, consistent with the notion that a less frequent vote results in lower management accountability.

Original languageEnglish (US)
Pages (from-to)1337-1374
Number of pages38
JournalContemporary Accounting Research
Volume33
Issue number4
DOIs
StatePublished - Dec 1 2016
Externally publishedYes

Fingerprint

Shareholders
Vote
Investors
Voting
Causal effect
Management accountability
Credibility
Shareholder voting
Advisors

ASJC Scopus subject areas

  • Accounting
  • Finance
  • Economics and Econometrics

Cite this

Management Influence on Investors : Evidence from Shareholder Votes on the Frequency of Say on Pay. / Ferri, Fabrizio; Oesch, David.

In: Contemporary Accounting Research, Vol. 33, No. 4, 01.12.2016, p. 1337-1374.

Research output: Contribution to journalArticle

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