Open AccessWhat does the market say about say-on-pay? A look at the Canadian bank experience
Author(s) -
Kim Trottier
Publication year - 2012
Publication title -
journal of governance and regulation
Language(s) - English
Resource type - Journals
eISSN - 2306-6784
pISSN - 2220-9352
DOI - 10.22495/jgr_v1_i3_c2_p1
Subject(s) - shareholder , executive compensation , compensation (psychology) , event study , share price , business , accounting , monetary economics , economics , actuarial science , finance , corporate governance , psychology , paleontology , context (archaeology) , stock exchange , psychoanalysis , biology
This paper explores the share price reaction to a recent news announcement that Canadian banks were adopting say-on-pay, a policy that gives shareholders an annual non-binding vote on executive compensation. Using event study methodology, the effect of adopting this new policy is explored and found to be associated with a significant increase in share price. This result suggests that giving shareholders a voice on executive compensation is expected to generate economic benefits, which adds to the paucity of knowledge currently available to shareholders and legislators as they consider the consequences of say-on-pay.