Show me the money-cut: Shareholder dividend suspensions and voluntary CEO pay cuts during the COVID pandemic

Lima e Alves, Denis, Gietzmann, Miles B. and Jørgensen, Bjørn N. (2021) Show me the money-cut: Shareholder dividend suspensions and voluntary CEO pay cuts during the COVID pandemic. Journal of Accounting and Public Policy, 40 (6). ISSN 0278-4254

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Abstract

Many US companies with December 31, 2019 as their fiscal year end had their Annual Shareholder Meeting scheduled (usually online) during the COVID pandemic. Unexpectedly faced with significant changes in operating environments, some companies decided to suspend shareholder dividend payments. In normal circumstances, this would be interpreted as a very negative event and shareholders could be expected to respond adversely at the annual meeting. However, we investigate whether CEOs were able to maintain shareholder support by offering a previously unheard of response of “sharing the pain”, committing to cut their own pay following a dividend suspension. At issue is whether investors acted as if they updated their inferences using the new voluntary pay-cut decision to infer the extent to which the CEOs underlying personality type was well matched to crisis management. We estimate an instrumental variables model in which the dividend suspension is used as an instrument for the endogenous pay cut variable.

Item Type: Article
Uncontrolled Keywords: covid-19,dividends suspension,executive pay-cut,say-on-pay,accounting,sociology and political science ,/dk/atira/pure/subjectarea/asjc/1400/1402
Faculty \ School: Faculty of Social Sciences > Norwich Business School
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Depositing User: LivePure Connector
Date Deposited: 13 Apr 2022 15:30
Last Modified: 13 Apr 2022 15:30
URI: https://ueaeprints.uea.ac.uk/id/eprint/84630
DOI: 10.1016/j.jaccpubpol.2021.106898

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