Say-on-pay and financial reporting quality: Evidence from Australia

In recent decades, policymakers around the world have introduced say-on-pay (SOP) laws to give shareholders a voice in setting executive compensation. This thesis examines the impact of Australia’s SOP regime — the so-called ‘two-strikes’ rule — on the quality of financial reporting. The findings suggest that under certain conditions, the incidence of a ‘strike’ (i.e., 25 percent or more votes against the remuneration report) can erode financial reporting quality, highlighting an unintended consequence of SOP voting. In addition to its scholarly contribution, this thesis has practical implications for investors, regulators, auditors and other corporate stakeholders.