Fersiynau electronig


  • 2019 It_s_OK_to_pay_well

    Llawysgrif awdur wedi’i dderbyn, 807 KB, dogfen-PDF

    Embargo yn dod i ben: 9/01/22

    Trwydded: CC BY-NC Dangos trwydded

Dangosydd eitem ddigidol (DOI)

We examine whether, and how, shareholders’ votes in the Say-on-Pay (SOP) are affected by the readability of the Compensation Discussion and Analysis (CD&A). Despite the SEC’s Plain English requirement, qualitative disclosures on executive remuneration are generally long and complex. Extant evidence on whether low readability results in higher or lower shareholder dissent in the SOP however is ambiguous. We resolve this debate by demonstrating that the effects of readability on SOP voting are heterogeneous; while obfuscation may reduce dissent when CEO compensation is close to ‘normal’ levels, diminished readability results in increased scepticism when pay levels are clearly excessive. The moderating role of readability is most pronounced for firms with less sophisticated shareholders, consistent with readability acting as a heuristic cue. Our results are robust to propensity score matching, and are less pronounced (1) when shareholders have less time to review the CD&A, and (2) when shareholders are distracted by competing AGMs, suggesting they are driven by readability, directly. Overall, our results highlight that greater use of Plain English in remuneration disclosures can have a substantial persuasive impact on shareholders.


Iaith wreiddiolSaesneg
Tudalennau (o-i)547-586
CyfnodolynJournal of Business Finance and Accounting
Rhif y cyfnodolyn5-6
Dyddiad ar-lein cynnar9 Ion 2020
Dynodwyr Gwrthrych Digidol (DOIs)
StatwsCyhoeddwyd - Mai 2020

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