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Changing board behaviour: The role of the 'Two Strikes' rule in improving the efficacy of Australian Say‐on‐Pay.

Authors :
Borthwick, James
Jun, Aelee
Ma, Shiguang
Source :
Accounting & Finance; Apr2020 Supplement S1, Vol. 60, p827-876, 50p, 11 Charts, 1 Graph
Publication Year :
2020

Abstract

This article analyses whether the transition from the 2004 CLERP 9 advisory Say‐on‐Pay regime to the 'Two Strikes' rule in 2012 influenced CEO pay in Australian firms. Analysing a panel of 2,074 firm‐years (2005–2015), we find that (i) CEO pay is a positive predictor of shareholder dissent; (ii) firm performance has a reducing effect on shareholder dissent; (iii) excessive shareholder dissent moderated CEO pay under the 'Two Strikes' rule relative to the CLERP 9 regime, and (iv) the market responded favourably to the introduction of the 'Two Strikes' rule and negatively to 'strike' instances after its introduction. [ABSTRACT FROM AUTHOR]

Subjects

Subjects :
EXECUTIVE compensation
BEHAVIOR

Details

Language :
English
ISSN :
08105391
Volume :
60
Database :
Complementary Index
Journal :
Accounting & Finance
Publication Type :
Academic Journal
Accession number :
142890979
Full Text :
https://doi.org/10.1111/acfi.12381