Say Pays! Shareholder Voice and Firm Performance* | Zendy

Vicente Cuñat | Zendy; Mireia Giné | Zendy; María Guadalupe | Zendy

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Say Pays! Shareholder Voice and Firm Performance*

Author(s) -

Vicente Cuñat,

Mireia Giné,

María Guadalupe

Publication year - 2015

Publication title -

european finance review

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 4.933

H-Index - 61

eISSN - 1573-692X

pISSN - 1382-6662

DOI - 10.1093/rof/rfv056

Subject(s) - shareholder , profitability index , regression discontinuity design , business , shareholder value , discontinuity (linguistics) , contrast (vision) , value (mathematics) , monetary economics , accounting , economics , finance , corporate governance , computer science , mathematics , mathematical analysis , statistics , artificial intelligence , machine learning

This paper estimates the effects of Say-on-Pay (SoP), a policy that increases shareholder "voice" by providing shareholders with a regular vote on executive pay. We apply a regression discontinuity design to the votes on shareholder-sponsored SoP proposals. Adopting SoP leads to large increases in market value (5%) and to improvements in long-term profitability. In contrast, it has limited effects on pay levels and structure. Taken together our results suggest that SoP can be seen as a repeated regular vote of confidence\udon the CEO and that it serves as a disciplining device

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