Citation:
Gallani, Susanna, Gregory Sabin, Lexor Adams, and Nicholas Haberling. "Christmas Inc. (A)." Harvard Business School Case 120-009, July 2019. View Details|
Working Paper HBS Working Paper Series 2019 Are ISS Recommendations Informative? Evidence from Assessments of Compensation Practices |
Abstract
Using detailed information on Institutional Shareholder Services (ISS) assessments of firms’ compensation practices, we examine whether these assessments identify poor compensation practices as measured by subsequent performance. While prior research provides consistent evidence of an association between shareholder voting outcomes and ISS recommendations, the evidence is mixed over whether their recommendations convey information about poor compensation policies. We find that ISS “Against” recommendations are associated with worse future accounting performance, consistent with ISS being able to detect suboptimal compensation packages. However, workload compression has an effect, as we find that the relation between assessments and future performance is stronger during off-season (for firms with non-December fiscal year end).
Keywords: Proxy Advisors; CEO compensation; Say-on-Pay; Institutional Shareholder voting; Executive Compensation; Performance;
Citation:
Albuquerque, Ana, Mary Ellen Carter, and Susanna Gallani. "Are ISS Recommendations Informative? Evidence from Assessments of Compensation Practices." Harvard Business School Working Paper, No. 19-085, February 2019. (Please contact the authors to request paper file.)
