Journal article
Effect of the Sarbanes-Oxley act on CEOs' stock ownership and pay-performance sensitivity
Review of quantitative finance and accounting, v 38(2), pp 177-207
01 Feb 2012
Abstract
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.
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Details
- Title
- Effect of the Sarbanes-Oxley act on CEOs' stock ownership and pay-performance sensitivity
- Creators
- Hsihui Chang - Drexel UniversityHiu Choy - Drexel UniversityKam-Ming Wan - University of Hong Kong
- Publication Details
- Review of quantitative finance and accounting, v 38(2), pp 177-207
- Publisher
- Springer Nature
- Number of pages
- 31
- Resource Type
- Journal article
- Language
- English
- Academic Unit
- Accounting
- Web of Science ID
- WOS:000210743100003
- Scopus ID
- 2-s2.0-84857648549
- Other Identifier
- 991019168514404721
InCites Highlights
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- Collaboration types
- Domestic collaboration
- International collaboration
- Web of Science research areas
- Business, Finance