Xu Wang

Graduation Semester and Year

2008

Language

English

Document Type

Dissertation

Degree Name

Doctor of Philosophy in Accounting

Department

Accounting

First Advisor

Chandra Subramaniam

Abstract

This study investigates the role of shareholder-sponsored corporate governance proposals in monitoring top management compensation. In particular, I test whether theories of agency costs, corporate governance, and optimal contracting can explain why shareholders submit executive-pay proposals, and examine the economic consequences of these shareholder proposals for the targeted firms. I find that firms are more likely to receive performance-oriented shareholder executive-pay proposals when the firms have higher agency costs, stronger shareholder rights, or higher unexpected executive compensation. Shareholder executive-pay proposals gain more voting support from shareholders if the proposals are performance-oriented (than non-performance-oriented), sponsored by pension or union funds (than individual or religious groups and other institutions). In one year subsequent to the year of receiving performance-oriented shareholder executive-pay proposals, proposal firms' executive pay-performance sensitivities in stock option grants, and cash and total compensation increase more than control firms'. In addition, CEOs' compensation structures shift more toward equity-based for the proposal firms than for control firms in the year subsequent to the proposal year.

Disciplines

Accounting | Business

Comments

Degree granted by The University of Texas at Arlington

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