Atif, Muhammad and Huang, Allen and Liu, Benjamin (2020) 'The effect of say on pay on CEO compensation and spill-over effect on corporate cash holdings: Evidence from Australia.' Pacific-Basin Finance Journal, 64. p. 101105. ISSN 0927-538X

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Abstract

We examine the impact of Australia's Remuneration Amendment Act 2011 on CEO compensation and its spill-over effect on cash holdings to better understand how the new legislation affects the principal–agent relationship. Using a sample of ASX top 300 firms from 2004 to 2015, we find that the Act leads to more use of equity-based compensation. We also document that, after the introduction of the Act, CEO equity-based and total compensations are negatively related with cash holdings, i.e., more equity and total compensations lead to lower cash holdings (a spill-over effect), indicating alignment of the principal–agent interests. Our results are robust to different estimation techniques. Our findings confirm that the Act is effective in driving a more efficient CEO pay strucure and provide important insights for the global discussion on compensation regulations.

Item Type:	Article
Uncontrolled Keywords:	Corporate governance; Say on pay; CEO compensation; Cash holdings
Subjects:	H Social Sciences > HF Commerce > HF5601 Accounting
Divisions:	Faculty of Social Sciences > Essex Business School > Essex Accounting Centre
SWORD Depositor:	Elements
Depositing User:	Elements
Date Deposited:	19 Jul 2019 15:05
Last Modified:	06 Jan 2022 13:59
URI:	http://repository.essex.ac.uk/id/eprint/24998

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