Effect of the Sarbanes-Oxley act on CEOs' stock ownership and pay-performance sensitivity

Hsihui Chang*, Hiu Lam Choy, Kam Ming Wan

*Motsvarande författare för detta arbete

Forskningsoutput: TidskriftsbidragArtikelPeer review

14 Citeringar (Scopus)

Sammanfattning

The main purpose of this paper is to provide evidence on the effect of the Sarbanes-Oxley Act on stock ownership and the various measures of pay-performance sensitivity of CEOs' wealth. The Sarbanes-Oxley Act (SOX) provides a natural experiment for examining how stock ownership and executive pay structure adapt to a change in regulatory environment. Using annual compensation data of S&P 1,500 firms in 1994-2005, we examine the impact of SOX on stock ownership and pay-performance sensitivity of CEOs. Consistent with our expectations, we find that in light of SOX: (1) stock ownership and (2) the total pay-performance sensitivity of CEOs have decreased substantially, indicating that SOX induces a weaker incentive alignment between shareholders and CEOs. In contrast, we find that after SOX stock ownership and the total pay-performance sensitivity of CEOs have remained unchanged in the regulated industries.

OriginalspråkEngelska
Referentgranskad vetenskaplig tidskriftReview of Quantitative Finance and Accounting
Volym38
Utgåva2
Sidor (från-till)177-207
Antal sidor31
ISSN0924-865X
DOI
StatusPublicerad - 01.02.2012
MoE-publikationstypA1 Originalartikel i en vetenskaplig tidskrift

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  • 511 Nationalekonomi

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