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Title: Say Pays! Shareholder Voice and Firm Performance

Author(s): Vicente Cuñat, Mireia Giné and Maria Guadalupe

Publication Date: September 2014

Keyword(s): corporate governance, executive compensation and Say-on-Pay

Programme Area(s): Financial Economics and Industrial Organization

Abstract: 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 (4%) and to improvements in longterm performance: profitability and labor productivity increase, while overheads and investment fall. In contrast, we find limited effects on pay levels and structure. This suggests that SoP serves as a regular vote of confidence on the CEO, that leads to higher efficiency and market value.

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Bibliographic Reference

Cuñat, V, Giné, M and Guadalupe, M. 2014. 'Say Pays! Shareholder Voice and Firm Performance'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=10141