The effect of say on pay on CEO compensation and spill-over effect on corporate cash holdings: Evidence from Australia

Muhammad Atif, Benjamin Liu, Allen Huang

Research output: Contribution to journalArticle

4 Citations (Scopus)


We examine the impact of Australia's Remuneration Amendment Act 2011 on CEO compensation and its spill-over effect on cash holdings to better understand how the new legislation affects the principal–agent relationship. Using a sample of ASX top 300 firms from 2004 to 2015, we find that the Act leads to more use of equity-based compensation. We also document that, after the introduction of the Act, CEO equity-based and total compensations are negatively related with cash holdings, i.e., more equity and total compensations lead to lower cash holdings (a spill-over effect), indicating alignment of the principal–agent interests. Our results are robust to different estimation techniques. Our findings confirm that the Act is effective in driving a more efficient CEO pay strucure and provide important insights for the global discussion on compensation regulations.
Original languageEnglish
Pages (from-to)(In-Press)
JournalPacific-Basin Finance Journal
Early online date9 Jan 2019
Publication statusE-pub ahead of print - 9 Jan 2019



  • Cash holdings
  • CEO compensation
  • Corporate governance
  • Say on pay

ASJC Scopus subject areas

  • Finance
  • Economics and Econometrics

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