Abstract
That's Not Fair! Deviations from Economic Rationality in Shareholder Say-on-Pay Voting
Academy of Management Annual Meeting Proceedings, Vol.2012(1), p.10808
07/2012
DOI: 10.5465/AMBPP.2012.10808abstract
Abstract
Abstract only
Do shareholders care about the relationship between CEO pay and firm performance? Historically, research on CEO pay has assumed that they do. We test this assumption by incorporating into the CEO pay literature theory which states that individuals often deviate from economic rationality in their actions. Assuming that shareholders are no exception to this theory, we conduct three experiments simulating shareholder “Say-on-Pay” votes. Our results provide strong evidence that shareholders based their evaluations of CEO compensation on the absolute level of pay, rather than on the link between pay and performance. We find that this relationship is mediated by shareholders’ perceptions that the CEO’s pay is fair or unfair. The evidence presented in this study calls into question the logic behind the recent advocacy for allowing shareholders a vote on CEO pay, as well as the broader assumption of shareholder rationality.
Details
- Title: Subtitle
- That's Not Fair! Deviations from Economic Rationality in Shareholder Say-on-Pay Voting
- Creators
- Ryan Adam Krause - Indiana U. Kelley SchoolKimberly Whitler - Indiana U. Kelley School
- Resource Type
- Abstract
- Publication Details
- Academy of Management Annual Meeting Proceedings, Vol.2012(1), p.10808
- DOI
- 10.5465/AMBPP.2012.10808abstract
- eISSN
- 2151-6561
- Language
- English
- Date published
- 07/2012
- Academic Unit
- Management and Entrepreneurship
- Record Identifier
- 9984937923602771
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