TY - JOUR

T1 - Determinants and Consequences of Executive Compensation-Related Shareholder Activism and Say-on-Pay Votes

T2 - A Literature Review and Research Agenda

AU - Obermann, Jörn

AU - Velte, Patrick

PY - 2018/6

Y1 - 2018/6

N2 - This systematic literature review analyses the determinants and consequences of executive compensation-related shareholder activism and say-on-pay (SOP) votes. The review covers 71 empirical articles published between January 1995 and September 2017. The studies are reviewed within an empirical research framework that separates the reasons for shareholder activism and SOP voting dissent as input factor on the one hand and the consequences of shareholderpressure as output factor on the other. This procedure identifies the five most important groups of factors in the literature: the level and structure of executive compensation, firm characteristics, corporate governance mechanisms, shareholder structure and stakeholders. Of these, executive compensation and firm characteristics are the most frequently examined. Further examination reveals that the key assumptions of neoclassical principal agent theory for bothmanagers and shareholders are not always consistent with recent empirical evidence. First, behavioral aspects (such as the perception of fairness) influence compensation activism and SOP votes. Second, non-financial interests significantly moderate shareholder activism. Insofar, we recommend integrating behavioral and non-financial aspects into the existing research. The implications are analyzed, and new directions for further research are discussed by proposing 19 different research questions.

AB - This systematic literature review analyses the determinants and consequences of executive compensation-related shareholder activism and say-on-pay (SOP) votes. The review covers 71 empirical articles published between January 1995 and September 2017. The studies are reviewed within an empirical research framework that separates the reasons for shareholder activism and SOP voting dissent as input factor on the one hand and the consequences of shareholderpressure as output factor on the other. This procedure identifies the five most important groups of factors in the literature: the level and structure of executive compensation, firm characteristics, corporate governance mechanisms, shareholder structure and stakeholders. Of these, executive compensation and firm characteristics are the most frequently examined. Further examination reveals that the key assumptions of neoclassical principal agent theory for bothmanagers and shareholders are not always consistent with recent empirical evidence. First, behavioral aspects (such as the perception of fairness) influence compensation activism and SOP votes. Second, non-financial interests significantly moderate shareholder activism. Insofar, we recommend integrating behavioral and non-financial aspects into the existing research. The implications are analyzed, and new directions for further research are discussed by proposing 19 different research questions.

KW - Management studies

KW - Say on pay

KW - Shareholder activism

KW - Executive compensation

KW - Remuneration votes

KW - Behavioural agency theory

UR - http://www.scopus.com/inward/record.url?scp=85042073971&partnerID=8YFLogxK

U2 - 10.1016/j.acclit.2018.02.001

DO - 10.1016/j.acclit.2018.02.001

M3 - Scientific review articles

VL - 40

SP - 116

EP - 151

JO - Journal of Accounting Literature

JF - Journal of Accounting Literature

SN - 0737-4607

ER -