Australia’s ‘two-strikes’ rule and the pay-performance link: Are shareholders judicious? |
| |
Authors: | Reza Monem Chew Ng |
| |
Institution: | Dept. of Accounting Finance & Economics, Griffith Business School, Griffith University, 170 Kessels Road, Nathan, Qld 4111, Australia |
| |
Abstract: | To improve accountability of executive compensation, Australia introduced the ‘say-on-pay’ legislation in 2011, which is widely known as the ‘two-strikes’ rule. We investigate the consequences of this new rule for the pay-performance link in Australian firms. Employing a matched-pair design, we find that pay changes of the chief executive officer and the key management personnel were not significantly positively related to the stock returns of the firms that registered a ‘first strike’ in 2011 under the ‘two-strikes’ rule. However, the relations improved significantly in 2012. Our results also suggest that the shareholders of the ‘first-strike’ firms may have been over-enthusiastic about their voting power in 2011 but exercised this power more judiciously in 2012. Our findings provide important insights for the global debate on governance of executive compensation. |
| |
Keywords: | ‘Two strikes’ rule Say on pay Executive compensation Pay-performance link Chief executive officer Corporate governance |
本文献已被 ScienceDirect 等数据库收录! |
|