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Proxy Voting on CEO Pay: Evidence from Rejection of the Inevitable Disclosure Doctrine

Author

Listed:
  • Xiaohui Li

    (The School of Accounting and Finance, Hong Kong Polytechnic University)

  • Yao Shen

    (Zicklin School of Business, c, City Univeristy of New York)

  • Jing Xie

    (Department of Finance and Business Economics, Faculty of Business Administration, University of Macau)

Abstract

We find that investors are more negative towards firm management in proxy voting when CEOs have higher job mobility. Specifically, we document an increased dissenting vote against management-sponsored compensation proposals after an exogenous positive shock to CEO job mobility. Consistent with the rent extraction hypothesis, the effect is more pronounced for firms with poor past performance, overpaid CEOs, and weaker corporate governance. Proxy advisors recommend more against firm management after the shock, casting a larger influence on voting outcomes. Moreover, our investor level analysis suggests that larger investors care less about job mobility in their voting.

Suggested Citation

  • Xiaohui Li & Yao Shen & Jing Xie, 2024. "Proxy Voting on CEO Pay: Evidence from Rejection of the Inevitable Disclosure Doctrine," Working Papers 202412, University of Macau, Faculty of Business Administration.
    • Handle: RePEc:boa:wpaper:202412
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    More about this item

    Keywords

    Proxy Voting; Executive Compensation; Labor Market; Proxy Advisor; Mutual Funds;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • J33 - Labor and Demographic Economics - - Wages, Compensation, and Labor Costs - - - Compensation Packages; Payment Methods
    • M12 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Administration - - - Personnel Management; Executives; Executive Compensation

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