TY - JOUR
T1 - Say-on-Pay in a Context of Concentrated Ownership. Evidence from Italy
AU - Belcredi, Massimo
AU - Bozzi, Stefano
AU - Ciavarella, Angela
AU - Novembre, Valerio
PY - 2014
Y1 - 2014
N2 - We investigate say-on-pay (SOP) voting outcomes in a country (Italy) where ownership structure is concentrated by regressing shareholder dissent on a comprehensive set of independent variables (spanning from remuneration structure and disclosure to corporate governance), coming from the Italian securities and exchange commission (CONSOB) and the listed companies’ industry association (Assonime-Emittenti Titoli) databases. Our main results may be summarized as follows: a) shareholder dissent in Italy is smaller, but still comparable with that found in the UK and the US, where ownership is disperse; b) dissent is negatively correlated with the equity stake held by the largest shareholder; we interpret this evidence as consistent with better monitoring and lower agency costs; c) dissent is, at best, only weakly related with company performance; however, it is positively correlated with CEO remuneration and negatively correlated with the level of disclosure, especially on the variable components of CEO pay; d) dissent is affected by investor activism at the company level, as proxied by the turnout of institutional investors at the AGM and by minority directors (a peculiar feature of Italian CG regulation) sitting on the board of target companies; e) finally, dissent is higher where shareholders’ SOP vote is non-binding, suggesting that the non-binding nature of the SOP vote may not reduce its effectiveness.
AB - We investigate say-on-pay (SOP) voting outcomes in a country (Italy) where ownership structure is concentrated by regressing shareholder dissent on a comprehensive set of independent variables (spanning from remuneration structure and disclosure to corporate governance), coming from the Italian securities and exchange commission (CONSOB) and the listed companies’ industry association (Assonime-Emittenti Titoli) databases. Our main results may be summarized as follows: a) shareholder dissent in Italy is smaller, but still comparable with that found in the UK and the US, where ownership is disperse; b) dissent is negatively correlated with the equity stake held by the largest shareholder; we interpret this evidence as consistent with better monitoring and lower agency costs; c) dissent is, at best, only weakly related with company performance; however, it is positively correlated with CEO remuneration and negatively correlated with the level of disclosure, especially on the variable components of CEO pay; d) dissent is affected by investor activism at the company level, as proxied by the turnout of institutional investors at the AGM and by minority directors (a peculiar feature of Italian CG regulation) sitting on the board of target companies; e) finally, dissent is higher where shareholders’ SOP vote is non-binding, suggesting that the non-binding nature of the SOP vote may not reduce its effectiveness.
KW - say-on-pay, remuneration, shareholder activism, institutional investors, corporate governance, concentrated ownership, shareholders' meetings
KW - say-on-pay, remuneration, shareholder activism, institutional investors, corporate governance, concentrated ownership, shareholders' meetings
UR - http://hdl.handle.net/10807/119317
UR - https://www.consob.it/documents/11973/204072/qdf76.pdf/7332c57e-a332-48c2-8966-7acd994a2c4c
M3 - Article
SN - 1121-3795
SP - 1
EP - 54
JO - QUADERNI DI FINANZA
JF - QUADERNI DI FINANZA
ER -