Joint Meeting of the Mid-Atlantic and Northeast Regions

Information Asymmetry and Say on Pay Abstention Votes

• In Event: Information Acquisition and Investor Reactions

Abstract

Say-on-pay (SOP) provision of the Dodd-Frank Act of 2010 empowers shareholders by mandating advisory voting on executive compensation during annual meetings. Extant literature maintains that the degree of effectiveness of SOP and the dynamics of the voting process remain unclear. Since its introduction, some shareholders have been abstaining from voting. Thus, we examine and discuss shareholder abstention votes. Using shareholder voting data from 2011 to 2015, we estimate regression models and find that SOP abstention is positively associated with information asymmetry. Our study contributes to the growing body of research on SOP votes as we shed light on SOP abstention votes. Our findings are important to regulators and policy makers who are concerned that SOP votes will be ignored because they are advisory and non-binding.

Authors

• Ayishat Omar, Rowan University

• Yu Cong, Morgan State University

• Alex P Tang, Morgan State University