Phantom of the Opera: Etfs and Shareholder Voting

The PCAOB mandated, over the objections of the large audit firms and others, that for fiscal years ending on or after December 15, 2017, the audit report shall include information about auditor tenure. In this paper we answer the call for academic research about “the impact and usefulness of the auditor tenure disclosure as it becomes implemented” from Franzel (2017). We use data from 2,718 firms in our analyses. We find that in the case of clients with long (short) auditor tenure, the proportion of shareholder votes not ratifying the auditor increased (decreased) after public disclosure of auditor tenure. Thus, it appears that public disclosure of auditor tenure influenced shareholder voting and sensitized shareholders to longer audit tenures.

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Compensation Disclosures and Corporate Governance through Shareholder Voting

Journal of Management Accounting Research ◽

10.2308/jmar-18-046 ◽

2019 ◽

Vol 32 (3) ◽

pp. 27-48 ◽

Cited By ~ 1

Author(s):

Brian Cadman ◽

Richard Carrizosa ◽

Xiaoxia Peng

Keyword(s):

Corporate Governance ◽

Fair Value ◽

Data Availability ◽

Shareholder Voting ◽

Compensation Committee ◽

The Public ◽

Equity Compensation ◽

Ceo Pay ◽

Jel Classifications

ABSTRACT There are several measures of equity compensation that may provide shareholders with distinct and useful information for evaluating CEO pay. We examine whether shareholders consider additional disclosures of equity compensation measures beyond the grant date fair value when participating in corporate governance. We find that CEO equity compensation expense, a distinct measure of equity compensation, is a determinant of shareholder voting for management sponsored equity plans and voting for directors that serve on the compensation committee. After controlling for ISS recommendations, we find that voting outcomes remain significantly related to abnormal equity compensation expense. Consistent with shareholders considering the equity compensation expense, we document that firms shorten equity compensation vesting periods when they are no longer required to disclose the equity compensation expense. Our findings suggest that shareholders rely on multiple, distinct measures of equity compensation when participating in corporate governance. JEL Classifications: M12; M52; G34. Data Availability: Data are available from the public sources cited in the text.

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