The Impact of Say-On-Pay on Firm Efficiency in Anglo-Saxon Economies—Do CEO Personal Traits and CG Mechanisms Matter?

Joura, Essam; Gerged, Ali Meftah; Xiao, Qin; Ullah, Subhan

Abstract

In this study, we explore how the personal traits of CEOs and corporate governance mechanisms moderate the link between Say-on-Pay (SOP) votes and various aspects of firm efficiency. Our sample consists of 1931 firms listed in four Anglo-Saxon economies (i.e., USA, UK, Canada and Australia) during a period of notable regulatory changes. Our findings reveal a significant and positive impact of SOP votes on firm efficiency. This suggests that company executives recognise that lower efficiency leads to lower pay or even job loss. Interestingly, our analysis indicates that younger managers can contribute more to creating value and improving business performance compared to their older counterparts. However, the relationship between gender and firm efficiency remains inconclusive. Furthermore, our study highlights the limited involvement of the board of directors in driving firm efficiency. This could be attributed to inadequate monitoring, cooperation, and communication among board members, particularly in the case of audit committees, which seem to have less skilled members. Alternatively, this lack of board engagement may be due to the influence of powerful managers within the company. This paper also offers practical implications to policymakers and practitioners and suggests avenues for future research that can build upon our evidence.

Citation

Joura, E., Gerged, A. M., Xiao, Q., & Ullah, S. (2025). The Impact of Say-On-Pay on Firm Efficiency in Anglo-Saxon Economies—Do CEO Personal Traits and CG Mechanisms Matter?. International journal of finance & economics : IJFE, https://doi.org/10.1002/ijfe.3131

• Journal Article Type: Article
• Acceptance Date: Jan 22, 2025
• Online Publication Date: Feb 12, 2025
• Publication Date: Feb 12, 2025
• Deposit Date: Apr 10, 2025
• Publicly Available Date: Apr 11, 2025
• Print ISSN: 1076-9307
• Publisher: Wiley
• Peer Reviewed: Peer Reviewed
• DOI: https://doi.org/10.1002/ijfe.3131
• Keywords: CEO personal traits; Corporate governance; Firm efficiency; IV-GMM estimator
• Public URL: https://hull-repository.worktribe.com/output/5007427