Skip to main content
SpringerLink
Log in

The Effects of Current Income Attributes on Nonprofessional Investors’ Say-on-Pay Judgments: Does Fairness Still Matter?

  • Published:
Journal of Business Ethics Aims and scope Submit manuscript

Abstract

The say-on-pay (SOP) regulation in the Dodd-Frank Act (Public L. no. 111–203, H.R. 4173 2010) requires publicly-traded U.S. firms to hold a nonbinding, advisory shareholder vote on executive compensation. Advocates claim that SOP voting gives shareholders a mechanism to hold managers and boards more accountable. Critics contend that SOP votes may simplistically reflect shareholders’ reactions to the overall value of CEO compensation or the firm’s net income. However, based on prior research, we contend that market participants’ SOP votes are likely to consider current income attributes. For example, the market punishes firms that do not meet or beat benchmarks such as analyst earnings expectations, and that shareholders scrutinize the quality of the income sources of firms that consistently meet/beat analyst expectations. We thus expect that more shareholders will provide ‘agree’ SOP votes for a firm that consistently meets/beats analyst forecasts and does so when net income does not include (rather than includes) nonrecurring gains. Further, we consider whether perceptions about the fairness of CEO compensation play a mediating role in the relationship between the interaction of these two current income attributes and SOP votes. Results from an experiment using evening MBA students as participants indicates that the two current income attributes significantly interact with respect to the percentage of agree SOP votes, and that compensation fairness perceptions fully mediate this relationship. Further, the mediating effect of compensation fairness perceptions is robust to including CEO-level and other determinants found in prior research. We conclude with a discussion of our findings and their implications for public policy and research.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Fig. 1
Fig. 2
Fig. 3

Similar content being viewed by others

Notes

  1. The tendency to focus on a firm’s net income and ignore the procedures and activities used to generate reported net income is referred to as earnings fixation (Bushee 2001; Elliott et al. 2011).

  2. Matteo Tonello and Stephan Robimov, “The 2010 Institutional Investment Report: Trends in Asset Allocation and Portfolio Composition,” published by the Conference Board (November 2010). Available at http://www.conference-board.org/publications/publicationdetail.cfm?publicationid=1872.

  3. In 2012, 515 firms solicited votes from their nonprofessional investors, up from 163 firms in 2011. In 2011, 91 % of votes cast by nonprofessional investors were agree SOP votes, compared to 86 % of votes cast by institutional investors (Chasan 2013).

  4. See Yermack (2010) for a review of shareholding voting opportunities. Prior research generally finds that company-initiated ratifications of incentive compensation plans (in compliance with exchange listing and/or tax regulations) generate higher negative votes (Gillan 2001; Martin and Thomas 2005); that negative votes are increasing in dilutions levels (Morgan and Poulsen 2001), broker votes (Bethel and Gillan 2002), involvement of proxy advisors (Morgan et al. 2006), and measures for excessive pay (Cai and Walkling 2011); and that negative votes are associated with subsequent reductions in stock option plans. Relatedly, shareholder votes against reelecting directors who are members of the board’s executive compensation committee are associated with lower CEO compensation levels (e.g., Cai et al. 2009; Fischer et al. 2009).

  5. The SOP voting mandate is not unique to the U.S. For example, the Remuneration Report Regulations in 2002 in the U.K. required listed companies to produce a detailed annual directors’ remuneration report and to hold a nonbinding, majority shareholder vote on the directors’ remuneration report.

  6. Our study differs from Kaplan et al. (2015) in three key ways. First, we examine economic factors that impact SOP votes rather than governance factors. In particular, Kaplan et al. (2015, 114) indicate that “…further research should consider economically based sources.” Second, we manipulate firm-level factors that impact SOP votes rather than CEO-level factors. Third, we directly tease out the financial performance construct by varying the firm’s two income attributes rather than indirectly capturing the reporting performance construct by varying the favorability of a news story from the business press. Indeed, Kaplan et al. (2015, 109) state that because “CEO Reputation for financial reporting is a relatively broad concept and likely includes a variety of factors, this manipulation included several factors…”

  7. Specifically, Koh et al. (2008) find that after the find that after the accounting scandals in the early 2000s, the stock market rewards diminished for firms meeting or beating analyst forecasts. These authors suggest that the decline in premium may be due to an increase in investor skepticism about how firms manage to meet or beat analyst expectations. This investor response is consistent with Jensen (2006), who attributes the scandals to corporate managers, which in turn lead investors to more closely scrutinize the integrity of published reports produced by these corporate managers. This investor response is also consistent with Jensen et al. (2004) and Graham et al. (2005), who argue that because of market pressures and penalties for missing earnings expectations, managers feel pressure to manage earnings and/or manage expectations. As a result, investors will question the quality of income sources especially when a firm meets or beats analyst forecasts.

  8. Following Kaplan et al. (2015), some disclosures are arguably proprietary and also voluntary rather than mandated. Thus, while our experiment explicitly states the two key objectives typically provided by firms, the experiment is silent on the company-specific performance goals, whether the CEO met those goals and the names of the peer firms. That said, firms do typically provide benchmarking information about their executive compensation package relative to a peer group, so do we include this detail in our experimental materials. Further, the experimental materials state that the CEO’s compensation is above the median of the peer group to indicate that this firm pays their CEO a competitive package that is comparable to its peer group, and hence reflective of the CEO’s relative talent and value that they bring to the firm (Albuquerque et al. 2013).

  9. This sequence and set of disclosures is aimed at mimicking the typical events leading up to the SOP vote so as to increase the generalizability of our results. At the year-end earnings release date, shareholders obtain information about the firm’s overall financial performance (Form 8-K) and as a result, whether the fourth-quarter earnings met or missed the analyst forecast. Then, at the annual report release date, shareholders obtain details about the firm’s income sources (Form 10-K). Then, at the proxy statement release date, shareholders obtain CEO pay and peer firm information (Form DEF 14A). Then, at or around the annual shareholder meeting, shareholders cast their SOP votes. As such, it is only after the proxy statement release date that shareholders can use the available information to form their distributive fairness perceptions about CEO compensation. Importantly, it is also at this date that the ECC discloses how they have changed, if at all, the CEO’s pay as a result of meeting or missing analysts’ expectations (Matsunaga and Park 2001), so it is only at this date that shareholders can use this information to form their procedural fairness perceptions about CEO compensation. We consider distributive and procedural fairness as two underlying components of compensation fairness perceptions in the additional analysis section below.

  10. The effects of distributive fairness and procedural fairness are further discussed and analyzed in the additional analysis section.

  11. Untabulated analysis indicates no systematic demographic differences between the participants who failed either or both of the manipulation check questions and those participants who passed except for the (self-reported) ability to understand financial reporting and the number of accounting courses. Adding these two variables to our analysis does not inferentially change our main results.

  12. As an additional analysis, we also conducted planned contrasts (Buckless and Ravenscroft 1990). Based on the pattern of results predicted under H1, the all quarters/without recurring gains cell condition was coded as +3, and the other three cell conditions were each coded as −1. These weights recognize that the percentage of agree SOP votes will be higher in one cell compared to the remaining three cells, and that the percentage of agree SOP votes in the remaining three cells are expected to be similar. Untabulated results indicate that the planned contrast is significant (contrast = 5.81, z = 3.42, p = 0.001, one-tailed), which is consistent with H1.

  13. We use the mediation model framework [i.e., Baron and Kenny (1986), Kenny et al. (1998), Shrout and Bolger (2002); Frazier et al. (2004)] and apply the Preacher and Hayes (2004) alternative tests for indirect effects. Results are inferentially similar using alternative mediation tests (Sobel 1982; Sobel 1986; Muller et al. 2005).

  14. As an additional analysis, we again conducted planned contrasts. Based on the pattern of results predicted under H2, the all quarters/without recurring gains cell condition was coded as +3, and the other three cell conditions were each coded as −1. These weights recognize that perceived fairness will be higher in one cell compared to the remaining three cells, and that perceived fairness in the remaining three cells are generally expected to be similar. Untabulated results indicate that the planned contrast is significant (contrast = 1.89, z = 1.70, p = 0.05, one-tailed), which is consistent with H2.

References

  • Albuquerque, A. M., De Franco, G., & Verdi, R. S. (2013). Peer choice in CEO compensation. Journal of Financial Economics, 108, 160–181.

    Article  Google Scholar 

  • Allee, K. D., Bhattacharya, N., Black, E. L., & Christensen, T. E. (2007). Pro forma disclosure and investor sophistication: external validation of experimental evidence using archival data. Accounting Organizations and Society, 32, 201–222.

    Article  Google Scholar 

  • Asquith, P., Mikhail, M. B., & Au, A. S. (2005). Information content of equity analyst reports. Journal of Financial Economics, 75, 245–282.

    Article  Google Scholar 

  • Banker, R. D., Huang, R., & Ramachandran, N. (2009). Incentive contracting and value relevance of earnings and cash flows. Journal of Accounting Research, 47(3), 647–678.

    Article  Google Scholar 

  • Baron, R. M., & Kenny, D. A. (1986). The moderator-mediator variable distinction in social psychological research: conceptual, strategic, and statistical considerations. Journal of Personality and Social Psychology, 51(6), 1173–1182.

    Article  Google Scholar 

  • Bartov, E., Givoly, D., & Hayn, C. (2002). The rewards to meeting or beating earnings expectations. Journal of Accounting and Economics, 33, 173–204.

    Article  Google Scholar 

  • Bethel, J. E., & Gillan, S. L. (2002). The impact of the institutional and regulatory environment on shareholder voting. Financial Management, 2002(4), 29–54.

    Article  Google Scholar 

  • Bhojraj, S., Hribar, P., Picconi, M., & McInnis, J. (2009). Making sense of cents: an examination of firms that marginally miss or beat analyst forecasts. The Journal of Finance, 64(5), 2361–2388.

    Article  Google Scholar 

  • Bierstaker, J. L., Cohen, J. R., DeZoort, F. T., & Hermanson, D. R. (2012). Audit committee compensation, fairness, and the resolution of accounting disagreements. Auditing: A Journal of Practice and Theory, 31(2), 131–150.

    Article  Google Scholar 

  • Bolton, L. E., Warlop, L., & Alba, J. W. (2003). Consumer perceptions of price (un)fairness. Journal of Consumer Research, 29(4), 474–491.

    Article  Google Scholar 

  • Brannick, M. T., & Brannick, J. P. (1989). Nonlinear and noncompensatory processes in performance evaluation. Organizational Behavior and Human Decision Processes, 44, 97–122.

    Article  Google Scholar 

  • Brown, L., & Caylor, M. (2005). A temporal analysis of quarterly earnings thresholds: Propensities and valuation consequences. The Accounting Review, 80, 423–440.

    Article  Google Scholar 

  • Buckless, F. A., & Ravenscroft, S. P. (1990). Contrast coding: a refinement of ANOVA in behavioral analysis. The Accounting Review, 65(4), 933–945.

    Google Scholar 

  • Bushee, B. J. (2001). Do institutional investors prefer near-term earnings over long-run value? Contemporary Accounting Research, 18(2), 207–246.

    Article  Google Scholar 

  • Cai, J., & Walkling, R. (2011). Shareholders’ say on pay: does it create value? Journal of Financial and Quantitative Analysis, 46, 299–339.

    Article  Google Scholar 

  • Cai, J., Garner, J. L., & Walkling, R. A. (2009). Electing directors. Journal of Finance, 64(5), 2389–2421.

    Article  Google Scholar 

  • Chasan, E. (2013) Companies target retail investors for ‘Say-on-Pay’ votes. Wall Street Journal. http://blogs.wsj.com/cfo/2013/03/05/getting-out-the-proxy-vote/. Accessed 5 March 2013.

  • Cohen, J., & Bennie, N. M. (2006). The applicability of a contingent factors model to accounting ethics research. Journal of Business Ethics, 68(1), 1–18.

    Article  Google Scholar 

  • Cohen, J. R., Holder-Webb, L., Sharp, D. J., & Pant, L. W. (2007). The effects of perceived fairness on opportunistic behavior. Contemporary Accounting Research, 24(4), 1119–1138.

    Article  Google Scholar 

  • Cohen, J., Holder-Webb, L., Nath, L., & Wood, D. (2011). Perceptions of retail investors of the decision-usefulness of non-financial information. Behavioral Research in Accounting, 23(1), 109–129.

    Article  Google Scholar 

  • Cohen, J., Manzon, G. B., Jr., & Zamora, V. L. (2015). Contextual and individual dimensions of taxpayer decision making. Journal of Business Ethics, 126, 631–647.

    Article  Google Scholar 

  • Colquitt, J. A., Conlon, D. E., Wesson, M. J., Porter, C. O. L. H., & Ng, K. Y. (2001). Justice at the Millennium: a meta-analytic review of 25 years of organizational justice research. Journal of Applied Psychology, 86(3), 425–445.

    Article  Google Scholar 

  • Dichev, I. D., Graham, J. R., Harvey, C. R., & Rajgopal, S. (2013). Earnings quality: evidence from the field. Journal of Accounting and Economics, 56(2), 1–33.

    Article  Google Scholar 

  • Dilla, W. N., Janvrin, D. J., & Jeffrey, C. (2013). The impact of graphical displays of pro forma earnings information on professional and nonprofessional investors’ earnings judgments. Behavioral Research in Accounting, 25(1), 37–60.

    Article  Google Scholar 

  • Dodd-Frank Wall Street Reform and Consumer Protect Act (Dodd-Frank Act) of 2010. (2010) Public L. no. 111–203, H.R. 4173.

  • Donaldson, T., & Preston, L. E. (1995). The stakeholder theory of the corporation: Concepts, evidence, and implications. Accademy of Management Review, 20(1), 65–91.

    Article  Google Scholar 

  • Elliott, W. B., Hodge, F. D., Kennedy, J. J., & Pronk, M. (2007). Are M.B.A. students a good proxy for nonprofessional investors? The Accounting Review, 82(1), 139–168.

    Article  Google Scholar 

  • Elliott, W. B., Hobson, J. L., & Jackson, K. E. (2011). Disaggregating management forecasts to reduce investors’ susceptibility to earnings fixation. The Accounting Review, 86(1), 185–208.

    Article  Google Scholar 

  • Ertimur, Y., Ferri, F., & Oesch, D. (2014). Shareholder votes and proxy advisors: evidence from say on pay. Journal of Accounting Research, (forthcoming).

  • Ertimur, Y., Ferri, F., & Stubben, S. R. (2010). Board of directors’ responsiveness to shareholders: evidence from shareholder proposals. Journal of Corporate Finance, 16, 53–72.

    Article  Google Scholar 

  • Ertimur, Y., Ferri, F., & Muslu, V. (2011). Shareholder activism and CEO pay. Review of Financial Studies, 24(2), 535–592.

    Article  Google Scholar 

  • Ferri, F., & Maber, D. (2013). Say on pay votes and CEO compensation: evidence from the UK. Review of Finance, 17, 527–563.

    Article  Google Scholar 

  • Fischer, P. E., Gramlich, J. D., Miller, B. P., & White, H. D. (2009). Investor perceptions of board performance: evidence from uncontested director elections. Journal of Accounting and Economics, 48(2–3), 172–189.

    Article  Google Scholar 

  • Frazier, P. A., Barron, K. E., & Tix, A. P. (2004). Testing moderator and mediator effects in counseling psychology research. Journal of Counseling Psychology, 51(1), 115–134.

    Article  Google Scholar 

  • Fredrickson, J. R., & Miller, J. S. (2004). The effects of pro forma earnings disclosures on analysts’ and nonprofessional investors’ equity valuation judgments. The Accounting Review, 79(3), 667–686.

    Article  Google Scholar 

  • Gillan, S. L. (2001). Option-based compensation: Panacea or Pandora’s box? Journal of Applied Corporate Finance, 14(2), 115–128.

    Article  Google Scholar 

  • Graham, J., Harvey, C., & Rajgopal, S. (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics, 40, 3–73.

    Article  Google Scholar 

  • Gul, F. A., Chen, C. J. P., & Tsai, J. S. L. (2003). Discretionary accounting accruals, managers’ incentives and audit fees. Contemporary Accounting Research, 20(3), 441–464.

    Article  Google Scholar 

  • Gunny, K. A. (2010). The relation between earnings management using real activities manipulation and future performance: evidence from meeting earnings benchmarks. Contemporary Accounting Research, 27(3), 855–888.

    Article  Google Scholar 

  • Harris, J. D. (2009). What’s wrong with executive compensation? Journal of Business Ethics, 85, 147–156.

    Article  Google Scholar 

  • Harrison, J. S., Bosse, D. A., & Phillips, R. A. (2010). Managing for stakeholders, stakeholder utility functions and competitive advantage. Strategic Management Journal, 31, 58–74.

    Article  Google Scholar 

  • Hayibor, S. (2012). Equity and expectancy considerations in stakeholder action. Business and Society, 51(2), 220–262.

    Article  Google Scholar 

  • Hayibor, S. (2016) Is fair treatment enough? Augmenting the fairness-based perspective on stakeholder behavior. Journal of Business Ethics, (forthcoming).

  • Hayibor, S., & Collins, C. (2016) Motivators of mobilization: Influences of inequity, expectancy, and resource dependence on stakeholder propensity to take action against the firm. Journal of Business Ethics, (forthcoming).

  • Hermanson, D. R., Tompkins, J. G., Veliyath, R., & Ye, Z. (2012). The compensation committee process. Contemporary Accounting Research, 29(3), 666–709.

    Article  Google Scholar 

  • Hosmer, L. T., & Kiewitz, C. (2005). Organizational justice: a behavioral science concept with critical implications for business ethics and stakeholder theory. Business Ethics Quarterly, 15(1), 67–91.

    Article  Google Scholar 

  • Iliev, P., & Vitanova, S. (2014). The Effect of the Say-on-Pay in the U.S. Available at SSRN: http://ssrn.com/abstract=2235064 or 10.2139/ssrn.2235064.

  • Jensen, M.C., Murphy, K., & Wruck, E. (2004). Remuneration: Where we’ve been, how we got to here, what are the problems, and how to fix them. Harvard NOM Working Papers no. 04–28.

  • Jensen, M.C. (2006). The puzzling state of low-integrity relations between managers and capital markets. Harvard NOM Working Papers no. 06–04.

  • Jones, T. M. (1991). Ethical decision making by individuals in organizations: an issue contingent model. Academy of Management Review, 16, 366–395.

    Article  Google Scholar 

  • Jones, J., Massey, D., & Thorne, L. (2003). Auditors’ ethical reasoning: insights from past research and implications for the future. Journal of Accounting Literature, 22, 45–103.

    Google Scholar 

  • Joutsenvirta, M. (2013). Executive pay and legitimacy: changing discursive battles over the morality of excessive manager compensation. Journal of Business Ethics, 116, 459–477.

    Article  Google Scholar 

  • Kahneman, D., Knetsch, J. L., & Thaler, R. H. (1986). Fairness as a constraint on profit seeking: entitlements in the market. The American Economic Review, 76(4), 728–741.

    Google Scholar 

  • Kaplan, S.N. (2012). Executive Compensation and Corporate Governance in the U.S.: Perceptions, Facts and Challenges. Chicago Booth Research Paper No. 12–42; Fama-Miller Working Paper. Available at SSRN: http://ssrn.com/abstract=2134208 or 10.2139/ssrn.2134208.

  • Kaplan, S. E., Samuels, J. A., & Cohen, J. (2015). An examination of the effect of CEO social ties and CEO reputation on nonprofessional investors’ say-on-pay judgments. Journal of Business Ethics, 126, 103–117.

    Article  Google Scholar 

  • Kasznik, R., & McNichols, M. (2002). Does meeting earnings expectations matter? Evidence from analyst forecast revisions and share prices. Journal of Accounting Research, 40, 727–759.

    Article  Google Scholar 

  • Kenny, D. A., Kashy, D. A., & Bolger, N. (1998). Data analysis in social psychology. In D. Gilbert, S. Fiske, & G. Lindzey (Eds.), Handbook of Social Psychology (4th ed.). Boston: McGraw Hill.

    Google Scholar 

  • Koh, K., Matsumoto, D. A., & Rajgopal, S. (2008). Meeting or beating analyst expectations in the post-scandals world: changes in stock market rewards and managerial actions. Contemporary Accounting Research, 25(4), 1067–1098.

    Article  Google Scholar 

  • Koonce, L., Williamson, M., & Winchel, J. (2010). Consensus information and nonprofessional investors’ reaction to the revelation of estimate inaccuracies. The Accounting Review, 85(3), 979–1000.

    Article  Google Scholar 

  • Krause, R., Whitler, K. A., & Semadeni, M. (2014). Power to the principals! An experimental look at shareholder say-on-pay voting. Academy of Management Journal, 57(1), 94–115.

    Article  Google Scholar 

  • Larcker, D.F., McCall, A.L., & Ormazabal, G. (2013). Outsourcing Shareholder Voting to Proxy Advisory Firms. Stanford Graduate School of Business Research Paper No. 2105. Available at SSRN: http://ssrn.com/abstract=2101453 or 10.2139/ssrn.2101453

  • Lee, D. C., & O’Neill, B. D. (2010). Executive compensation: Dodd-Frank’s “Say-on-Pay” Provisions. Insights: The Corporate and Securities Law Advisor, 24(10), 1–10.

    Google Scholar 

  • Levitt, A., Jr. (1998). The “numbers game”. The CPA Journal, 68(12), 14–19.

    Google Scholar 

  • Libby, R., Bloomfield, R. B., & Nelson, M. W. (2002). Experimental research in financial accounting. Accounting Organizations and Society, 27, 775–810.

    Article  Google Scholar 

  • Malsch, B., Tremblay, M.-S., & Gendron, Y. (2012). Sense-making in compensation committees: a cultural theory perspective. Organization Studies, 33(3), 38–421.

    Article  Google Scholar 

  • Martin, K. J., & Thomas, R. S. (2005). When is enough, enough? Market reaction to highly dilutive stock option plans and the subsequent impact on CEO compensation. Journal of Corporate Finance, 11(1–2), 61–83.

    Article  Google Scholar 

  • Matsumura, E. M., & Shin, J. Y. (2005). Corporate governance reform and CEO compensation: intended and unintended consequences. Journal of Business Ethics, 62, 101–113.

    Article  Google Scholar 

  • Matsunaga, S., & Park, C. (2001). The effect of missing a quarterly earnings benchmark on the CEO’s annual bonus. The Accounting Review, 76(3), 313–332.

    Article  Google Scholar 

  • Milliken, G. A., & Johnson, D. E. (1992). Analysis of messy data, volume 1: designed experiments. New York: Chapman and Hall.

    Google Scholar 

  • Minoja, M. (2012). Stakeholder management theory, firm strategy, and ambidexterity. Journal of Business Ethics, 109, 67–82.

    Article  Google Scholar 

  • Morgan, A. G., & Poulsen, A. B. (2001). Linking pay to performance—compensation proposals in the S&P500. Journal of Financial Economics, 62(3), 489–523.

    Article  Google Scholar 

  • Morgan, A., Poulsen, A., & Wolf, J. (2006). The evolution of shareholder voting for executive compensation schemes. Journal of Corporate Finance, 12, 715–737.

    Article  Google Scholar 

  • Muller, D., Judd, C. M., & Yzerbyt, V. Y. (2005). When moderation is mediated and mediation is moderated. Journal of Personality and Social Psychology, 89(6), 852–863.

    Article  Google Scholar 

  • Murphy, K. J., & Sandino, T. (2010). Executive pay and “independent” compensation consultants. Journal of Accounting and Economics, 49, 247–262.

    Article  Google Scholar 

  • Nyberg, A. J., Fulmer, I. S., Gerhart, B., & Carpenter, M. A. (2010). Agency theory revisited: CEO return and shareholder interest alignment. The Academy of Management Journal, 53(5), 1029–1049.

    Article  Google Scholar 

  • Ohlson, J. A. (2009). Accounting data and value: the basic results. Contemporary Accounting Research, 26(1), 231–259.

    Article  Google Scholar 

  • Palepu, K. G., & Healy, P. M. (2012). Business analysis and valuation (5th ed.). Mason: Thomson Southwestern.

    Google Scholar 

  • Perez-Batres, L. A., Doh, J. P., Miller, V. V., & Pisani, M. J. (2012). Stakeholder pressures as determinants of CSR strategic choice: why do firms choose symbolic versus substantive self-regulatory codes of conduct? Journal of Business Ethics, 110, 157–172.

    Article  Google Scholar 

  • Preacher, K. J., & Hayes, A. F. (2004). SPSS and SAS procedures for estimating indirect effects in simple mediation models. Behavioral Research Methods Instruments and Computers, 36(4), 717–731.

    Article  Google Scholar 

  • Rest, J. R., & Narvaez, D. (Eds.). (1994). Moral development in the professions. Hillsdale: Lawrence Erlbaum.

    Google Scholar 

  • Roychowdhury, S. (2006). Earnings management through real activities manipulation. Journal of Accounting and Economics, 42, 335–370.

    Article  Google Scholar 

  • Rutledge, R. W., & Karim, K. E. (1999). The influence of self-interest and ethical considerations on managers’ evaluation Judgments. Accounting, Organization and Society, 24, 173–184.

    Article  Google Scholar 

  • Shrout, P. E., & Bolger, N. (2002). Mediation in experimental and nonexperimental studies: new procedures and recommendations. Psychological Methods, 7(4), 422–445.

    Article  Google Scholar 

  • Skinner, D., & Sloan, R. (2002). Earnings surprises, growth expectations, and stock returns or don’t let an eamings torpedo sink your portfolio. Review of Accounting Studies, 1(2–3), 289–312.

    Article  Google Scholar 

  • Sobel, M. E. (1982). Asymptotic confidence intervals for indirect effects in structural equation models. Sociological Methodology, 13, 290–312.

    Article  Google Scholar 

  • Sobel, M. E. (1986). Some new results on indirect effects and their standard errors in covariance structure models. Sociological Methodology, 16, 159–186.

    Article  Google Scholar 

  • Thaler, R. H., Tversky, A., Kahneman, D., & Schwartz, A. (1997). The effect of myopia and loss aversion on risk taking: an experimental test. Quarterly Journal of Economics, 112, 647–661.

    Article  Google Scholar 

  • Thomas, R. S., & Cotter, J. F. (2007). Shareholder proposals in the new millennium: shareholder support, board response, and market reaction. Journal of Corporate Finance, 13, 368–391.

    Article  Google Scholar 

  • Van Buren, H. J. (2001). If fairness is the problem, is consent the solution? Integrating ISCT and stakeholder theory. Business Ethics Quarterly, 11(3), 481–499.

    Article  Google Scholar 

  • Yermack, D. (2010). Shareholder voting and corporate governance. Annual Review of Financial Economics, 2, 103–125.

    Article  Google Scholar 

Download references

Author information

Authors and Affiliations

  1. School of Accountancy, W.P. Carey School of Business, Arizona State University, P.O. Box 873606, Tempe, AZ, 85287-3606, USA

    Steven E. Kaplan

  2. Department of Accounting, Albers School of Business and Economics, Seattle University, 901 12th Avenue, P.O. Box 222000, Seattle, WA, 98122-1090, USA

    Valentina L. Zamora

Authors
  1. Steven E. Kaplan
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Valentina L. Zamora
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Steven E. Kaplan.

Appendices

Appendix: Say-on-Pay Judgment, Compensation Fairness Perceptions, Management Credibility Assessments, and Investment Viability Beliefs

figure a

Say-on-Pay Judgment, Future Performance Prospects Assessments, Compensation Fairness Perceptions, and Investment Viability Beliefs

figure b
figure c

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Kaplan, S.E., Zamora, V.L. The Effects of Current Income Attributes on Nonprofessional Investors’ Say-on-Pay Judgments: Does Fairness Still Matter?. J Bus Ethics 153, 407–425 (2018). https://doi.org/10.1007/s10551-016-3315-3

Download citation

  • Received:

  • Accepted:

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1007/s10551-016-3315-3

Keywords

Search

Navigation