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An Empirical Analysis of the SEC's 1992 Proxy Reforms on Executive Compensation

Author

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  • Johnson, Marilyn F.

    (Michigan State U)

  • Nelson, Karen K.

    (Stanford U)

  • Shackell, Margaret B.

    (U of Notre Dame)

Abstract

We examine the SEC's 1992 proxy reforms that expanded the amount of information about executive pay that is required to be disclosed in corporate proxy statements and permitted shareholders to file proxy proposals about executive compensation. Using a sample of executive compensation proposals filed against 64 firms during 1992-1995. We find that the stock market reaction to the reforms suggest that they imposed significant political costs on firms, without offsetting benefits to shareholders in the form of improved monitoring. We also find that the proposal filing decision primarily reflects populist political concerns about pay policies, but that voting outcomes primarily reflect shareholder concerns about the degree of incentive alignment provided by the firm's compensation contracts.

Suggested Citation

  • Johnson, Marilyn F. & Nelson, Karen K. & Shackell, Margaret B., 2001. "An Empirical Analysis of the SEC's 1992 Proxy Reforms on Executive Compensation," Research Papers 1679, Stanford University, Graduate School of Business.
    • Handle: RePEc:ecl:stabus:1679
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    2. Arantxa Jarque, 2008. "CEO compensation : trends, market changes, and regulation," Economic Quarterly, Federal Reserve Bank of Richmond, vol. 94(Sum), pages 265-300.

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    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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