Abstract: This paper uses an event study approach to investigate the shareholder wealth responses to European legislation on bank executive compensation. Using a sample of 124 banks over 2009?2010 and over 20 legislative and related events, we find that in early stages bank shareholders react positively to broad discussion at the EU level on executive pay. When plans to regulate the pay process are considered, however, this results in a negative stockholder reaction. We also find that large bank shareholders are most affected by remuneration policy.

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