Disclosure, shareholder oversight and pay-performance link

Clarkson, Peter M., Walker, Julie and Nicholls, Shannon (2011) Disclosure, shareholder oversight and pay-performance link. Journal of Contemporary Accounting and Economics, 7 2: 47-64. doi:10.1016/j.jcae.2011.07.001

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Author Clarkson, Peter M.
Walker, Julie
Nicholls, Shannon
Title Disclosure, shareholder oversight and pay-performance link
Journal name Journal of Contemporary Accounting and Economics   Check publisher's open access policy
ISSN 1815-5669
Publication date 2011-12
Sub-type Article (original research)
DOI 10.1016/j.jcae.2011.07.001
Open Access Status
Volume 7
Issue 2
Start page 47
End page 64
Total pages 18
Place of publication Oxford, United Kingdom
Publisher Elsevier
Collection year 2012
Language eng
Formatted abstract
This paper investigates the effect of increased shareholder oversight and disclosure about executive remuneration on the pay–performance relation, while controlling for contemporaneous changes in corporate governance practice. Our sample consists of 240 ASX-listed firms with annual reports available for each year over the period 2001–2009, a period which straddles the timing of regulatory change. We initially document the conjectured improvements in remuneration disclosure and shareholder oversight in the form of the advisory vote on the remuneration report. Following, we find as predicted a general strengthening of the pay–performance relation over the study period, with the increased sensitivity of reported CEO remuneration to firm performance being primarily related to enhanced remuneration disclosure and the non-binding shareholder vote on the remuneration report. Our results lead us to conclude that enhanced oversight over executive remuneration arrangements brought about by regulatory change has positively impacted the executive remuneration process by strengthening the pay–performance relation and making the process appear more accountable.
Keyword Executive remuneration
Pay–performance sensitivity
Remuneration disclosure
Shareholder remuneration vote
Corporate governance
Q-Index Code C1
Q-Index Status Confirmed Code
Institutional Status UQ

Document type: Journal Article
Sub-type: Article (original research)
Collections: Official 2012 Collection
UQ Business School Publications
 
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Created: Fri, 16 Sep 2011, 12:10:07 EST by Karen Morgan on behalf of UQ Business School