Do Voting Rights Matter? Evidence From the Adoption of Equity-Based Compensation Plans

• 成果类型: Article
• 署名作者: Balachandran, Sudhakar V.; Joos, Peter; Weber, Joseph
• 署名单位: University of Illinois System; University of Illinois Chicago; University of Illinois Chicago Hospital; Massachusetts Institute of Technology (MIT)
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/j.1911-3846.2012.01187.x
• 发表日期: 2012
• 页码: 1204-+
• 关键词: financial accounting information; corporate governance; STOCK-OPTIONS; incentives; SHAREHOLDERS; OWNERSHIP; BEHAVIOR; COSTS; firm

摘要

We provide evidence on the efficiency of shareholder voting as a control mechanism by examining the decision by firms to adopt equity-based compensation plans with or without shareholder approval and by investigating the relation between shareholder approval of equity-based compensation plans and firm performance in the future. In our first analysis, we find that firms that are more likely to have equity-based compensation plans rejected are also more likely to adopt plans without shareholder approval. Also, firms with higher agency costs or a lower degree of monitoring by owners are more likely to adopt plans without shareholder approval. In our second analysis, we find that firms that seek shareholder approval for equity-based compensation plans exhibit, on average, better future performance than firms that do not obtain approval. The result is consistent with internal controls, such as shareholder voting, being associated with the efficiency of equity-based compensation plans. We contribute to the literature by providing empirical evidence on the efficiency of one aspect of firms' systems of internal controls, namely the ratification of managerial decisions.