The impact of Say-on-Pay votes on firms' strategic policies: Insights from the Anglo-Saxon economy

Joura, Essam; Xiao, Qin; Ullah, Subhan

doi:10.1016/j.irfa.2020.101606

Cited by 4 publications

(3 citation statements)

References 96 publications

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“…On the other hand, the business operation will face fierce competition and uncertainty of the environment, senior managers may take risk aversion to technological innovation on behalf of their interests (Guan & Zhang, 2020; Xi & Zhang, 2021). According to agency theory, the most important game is the asymmetry of information (Joura et al, 2021). The management may start from their own selfish perspective, and choose non-corporate value maximization (Van Dun et al, 2017).…”

Section: Literature Review and Research Hypothesismentioning

confidence: 99%

R&D Investment, Executive Incentive, and Financial Performance in GEM: Based on Three-Stage Least Squares Method

Liu,

Lei,

Jin

et al. 2023

Sage Open

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China’s GEM (Growth Enterprise Market, also named as ChiNext stock market) enterprises are mainly small and medium-sized enterprises in the start-up stage, which have high-speed growth. This work uses three-stage least squares (3SLS) based on combines system equation to study the impact of technological innovation investment, executive incentive, and enterprise financial performance. The results show that in China’s GEM enterprises, R&D in the current period positively affects financial performance in 1% significance level. R&D of the lag period has a significant negative impact on the financial performance of the current period. Conversely, the financial performance of the current period has a significant negative impact on R&D. While both salary incentive and equity incentive will improve financial performance, executives seem to value short-term interests MORE. Executive equity incentive has a significant negative moderating effect ownership due to ownership structure in GEM is needed to strengthen the control right. This work proposes a new research horizon in GEM in China, and can help the GEM design an effective management mechanism to improve the financial performance of the enterprise.

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Section: Literature Review and Research Hypothesismentioning

confidence: 99%

R&D Investment, Executive Incentive, and Financial Performance in GEM: Based on Three-Stage Least Squares Method

Liu,

Lei,

Jin

et al. 2023

Sage Open

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“…According to the agency theory, coordination and communication problems can occur when a firm's board has a large number of directors. Larger boards have more disagreements, are less focused, and thereby can be less effective and vigilant in monitoring CEOs (Salama & Putnam, 2013;Joura et al, 2021). Bebchuk et al (2002) suggest that CEOs have more power when boards are larger, which makes it more difficult for directors to organize in opposition to managers.…”

Section: Board Sizementioning

confidence: 99%

The moderating effects of CEO power and personal traits on say‐on‐pay effectiveness: Insights from the Anglo‐Saxon economies

2022

Self Cite

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This study investigates the efficacy of say-on-pay (SOP) regulation in mitigating excessive CEO compensation and how it is affected by CEO personal traits and the power distribution inside a corporation. Using IV-GMM method and a sample of 1,931 firms from Australia, Canada, the UK, and the USA, we find that shareholder voices are successful in reducing the pay gap between CEOs and the median employee, regardless of the exact nature of the regulation. In addition, older CEOs are associated with lower pay ratios and there are some evidences suggesting that older or female CEOs enhance SOP effectiveness.Further, power distribution manifested through corporate governance mechanisms matters, as increasing board size and director and audit committee independence reduce pay ratio. A measure of CEO power, CEO pay slice, has a significant and large positive explanatory power for the model and its exclusion can greatly exaggerate the estimated impact of SOP on pay ratio. Another measure of CEO power, CEO duality, appears to enhance the potency of SOP slightly. There is also some evidence indicating that ownership concentration enhances SOP effectiveness. Our findings have implications for companies, investors, and regulators concerning the importance of power balance structure within corporations.

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“…Although the magnitude of shareholder dissent is generally low and there have been limited number of cases where voting has altered the outcome (Iliev, Lins, Miller, & Roth, 2015), the variations in dissent provide insights into the effectiveness of shareholder empowerment and disapproval expressed in shareholder dissent could be followed by value-creating actions (Fischer, Gramlich, Miller, & White, 2009). There is evidence on the role of voting in director elections (Jiang, Wan, & Zhao, 2016), mergers and acquisitions (Tokbolat et al, 2019), and executive remuneration (Joura, Xiao, & Ullah, 2021). Yet, despite widespread regulatory reforms and shareholders' pressure on firms to de-diversify ii , to the best of our knowledge, there has been no empirical evidence on shareholder empowerment, and particularly voting, in the context of corporate diversification and divestment.…”

Section: Introductionmentioning

confidence: 99%

Corporate diversification, refocusing and shareholder voting

Tokbolat

Thompson

2021

International Review of Financial Analysis

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The impact of Say-on-Pay votes on firms' strategic policies: Insights from the Anglo-Saxon economy

Cited by 4 publications

References 96 publications

R&D Investment, Executive Incentive, and Financial Performance in GEM: Based on Three-Stage Least Squares Method

R&D Investment, Executive Incentive, and Financial Performance in GEM: Based on Three-Stage Least Squares Method

The moderating effects of CEO power and personal traits on say‐on‐pay effectiveness: Insights from the Anglo‐Saxon economies

Corporate diversification, refocusing and shareholder voting

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