We assess the stock market reaction to proposal of incentive plans for directors in a sample of 289 firms. The reaction is both economically and statistically insignificant. This result suggests that shareholders do not necessarily benefit from the adoption of such plans. Across firms, we find that the market reaction depends on whether the CEO is involved in director selection; stock markets react negatively to plans proposed by firms without nomination committees. These findings highlight the important link between corporate governance and the effectiveness of director incentive plans.

Date of creation, presentation, or exhibit



Financial Management. Winter 2001. Note: imported from RIT’s Digital Media Library running on DSpace to RIT Scholar Works in February 2014.

Document Type

Conference Proceeding

Department, Program, or Center

Accounting (SCB)


RIT – Main Campus