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Journal of Business Ethics

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01-01-2015 | Discussant Comments

Discussant Comment on An Examination of the Effect of CEO Social Ties and CEO Reputation on Nonprofessional Investors’ Say-on-Pay Judgments, by Steve Kaplan, Janet Samuels, Jeffrey Cohen

Author: Regan N. Schmidt

Published in: Journal of Business Ethics | Issue 1/2015

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Kaplan et al. (2014) (hereafter the article) examines how CEO reputation and social ties between the CEO and the executive compensation committee (ECC) impact how nonprofessional investors’ support CEO compensation proposed by the ECC. The article’s experimental method draws on organizational justice theory to explain how these antecedents, CEO reputation and CEO social ties, impact say-on-pay judgments through perceptions of fairness. To understand the article’s contribution, I will first review pertinent issues surrounding executive compensation and ECCs to provide a broader context for the article. The discussion will then turn to the article’s conceptual framework and results followed by suggestions for future research. …

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In the 2012 (2011) calendar year, 2.6 % (1 %) of the reporting Russell 3000 companies failed to achieve 50 % support for say-on-pay resolution (Semler Brossy Consulting Group 2012).

Comparable event studies conducted at the passage of the Dodd-Frank Act in the United States have documented mixed results (e.g., Cai and Walking 2011; Larcker et al. 2011).

Stated differently, perhaps it is CEO reputation and/or the belief that the EPS is misstated that is causing the effect.

Dimensionality is not a new debate in organizational justice research (e.g., Colquitt 2001; Colquitt et al. 2001).

For example, a relative small amount of remuneration may, in a certain context, be “fair”.

For example, prior research has found shareholder valuations of executive compensation may differ from manager valuations (Lambert et al. 1991), and that ECCs take into account growth opportunities and product time horizons that are not fully captured by accounting or market information (Bushman et al. 1996; Lambert and Larcker 1987).

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Title: Discussant Comment on An Examination of the Effect of CEO Social Ties and CEO Reputation on Nonprofessional Investors’ Say-on-Pay Judgments, by Steve Kaplan, Janet Samuels, Jeffrey Cohen
Author: Regan N. Schmidt
Publication date: 01-01-2015
Publisher: Springer Netherlands
Published in: Journal of Business Ethics / Issue 1/2015
Print ISSN: 0167-4544
Electronic ISSN: 1573-0697
DOI: https://doi.org/10.1007/s10551-013-2041-3

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