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Contribution Details

Type Working Paper
Scope Discipline-based scholarship
Title Say-on-Pay and Shareholder Value: The Tension between Agency and Hold-up
Organization Unit
  • Alexander Wagner
  • Christoph Wenk Bernasconi
  • English
Institution University of Zurich
Series Name Swiss Finance Institute Research Paper
Number 11-12
Number of Pages 47
Date 2023
Abstract Text A set of policy experiments regarding binding say-on-pay votes in Switzerland suggests that shareholders may prefer to have limits set on their own power. The stock price reactions indicate a trade-off: On the one hand, binding votes on executive compensation amounts enhance the alignment of management interests with those of the shareholders, reducing agency costs. On the other hand, when shareholders have the power to (partially) set pay levels retrospectively, it may increase hold-up problems by distorting executives’ incentives to make extra-contractual, firm-specific investments. These findings have implications for the design of policy.
Free access at DOI
Digital Object Identifier 10.2139/ssrn.1793089
Other Identification Number merlin-id:9204
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