Say-On-Pay Voting: The Moderating Roles of Executive Pay Misassessment and Pay-for-luck Compensation on CD&A Usefulness

Authors

  • Wichawadee Racharoenkit Chulalongkorn University.
  • Aim-Orn Jaikengkit Chulalongkorn University.

DOI:

https://doi.org/10.58837/CHULA.CBSJ.46.1.5

Keywords:

Irrational SOP Voting, Pay-for-luck Compensation, CD&A Usefulness

Abstract

Although multiple studies have confirmed the instances of irrational Say-On-Pay (SOP) voting and pay-for-luck compensation, the assessment of executive compensation under these occurrences remained unrevealed prior to our research. This research attempts to address these limitations by defining irrational SOP voting and pay-for-luck variables and modifying the SOP voting determinants model, drawing on information-processing theory. The objectives are to investigate: the moderating effect of executive pay misassessment linked to irrational SOP voting and pay-for-luck compensation on CD&A usefulness, reflected by the association between excessive pay and SOP voting outcomes and the association between pay-performance sensitivity (PPS) and SOP voting outcomes, and shareholder awareness of pay-for-luck compensation, indicated by the association between pay-for-luck and SOP voting outcomes. The results show the significant moderating roles of executive compensation misassessment and pay-for-luck compensation on SOP voting outcomes and shed light on the unawareness of executive pay-for-luck. Overall, this study demonstrates a better explanation of SOP voting decisions through the lens of information-processing theory. Additionally, it provides new evidence of the PPS assessment concerning shareholders unawareness of pay-for-luck compensation.

Author Biographies

Wichawadee Racharoenkit, Chulalongkorn University.

Chulalongkorn Business School,

Aim-Orn Jaikengkit, Chulalongkorn University.

Chulalongkorn Business School,

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Published

2024-06-24

How to Cite

Racharoenkit, W., & Jaikengkit, A.-O. (2024). Say-On-Pay Voting: The Moderating Roles of Executive Pay Misassessment and Pay-for-luck Compensation on CD&A Usefulness. Creative Business and Sustainability Journal, 46(1), 86–113. https://doi.org/10.58837/CHULA.CBSJ.46.1.5

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Research Articles