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Say on Pay Laws Executive Compensation Pay Slice and Firm Valuation Around the World
Resource type
Authors/contributors
- Correa, Ricardo (Author)
- Lel, Ugur (Author)
Title
Say on Pay Laws Executive Compensation Pay Slice and Firm Valuation Around the World
Abstract
Using a large sample of firms from 38 countries over the 2001–2012 period, this study finds evidence that, following the adoption of say on pay (SoP) laws, chief executive officer (CEO) pay growth rates decline and the sensitivity of CEO pay to firm performance improves. These changes are concentrated in firms with high excess pay and shareholder dissent, long CEO tenure, and less independent boards. Further, the portion of top management pay captured by CEOs is lower in the post-SoP period, which is associated with higher firm valuations. Overall, these results suggest that SoP laws are associated with significant changes in CEO pay policies.
Publication
Journal of Financial Economics
Volume
122
Issue
3
Pages
500-520
Date
2016
Citation
Correa, R., & Lel, U. (2016). Say on Pay Laws Executive Compensation Pay Slice and Firm Valuation Around the World. Journal of Financial Economics, 122, 500–520.
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