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We examine the 49 Standard & Poor's (S&P) 500 firms that voluntarily disclosed in their 1993 proxy statements, the composition of the comparison group used by each board's compensation committee to set executive compensation policies. We hypothesize that the net benefits of this disclosure are largest when (1) there is a high degree of stakeholder concern about compensation, (2) compensation policies are defensible, and (3) corporate governance is strong. Consistent with our stakeholder concern prediction, disclosing firms have higher compensation levels and are more apt to have received prior shareholder proposals about executive compensation. Contrary to this prediction, we find a negative association between financial press coverage of compensation policies and the probability of disclosure. Additionally, the disclosure decision is unrelated to the defensibility of compensation policies and the firm's corporate governance profile. Industry‐adjusted firm performance, managerial entrenchment, CEO tenure, institutional holdings, and compensation committee independence variables are insignificant. We also compare the financial performance and compensation practices of compensation peers to two yardsticks — performance and pay practices at the sample firms and the corresponding S&P industry index firms. The compensation levels of compensation peers exceed those of the firms in the corresponding S&P industry indexes. Because (1) compensation levels and performance sensitivities at sample firms are more similar to those at compensation peers than to those at S&P industry index firms, and (2) the superior financial performance and higher performance sensitivities of disclosing firms justify high pay, this evidence suggests that the compensation peers of disclosing firms are an appropriate comparison group.

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Although knowledge has been linked to productivity within and between organizations, little is known about how knowledge flows into schools and then diffuses from teacher to teacher within schools. Here, the authors hypothesize that the value of different sources of knowledge depends on a teacher’s current level of implementation. The authors test their theory using longitudinal network data from 470 teachers in 13 schools. From models of change (i.e., first differences) in teachers’ use of computers over a one-year period, the authors infer that the more a teacher at the lowest initial levels of implementing an innovation is exposed to professional development focused on student learning, the more she increases her level of implementation (focus); the more a teacher at an intermediate initial level of implementation has opportunities to experiment and explore, the more she sustains her level of implementation (fiddle); and the more a teacher at a high initial level of implementation accesses the knowledge of others, the more she increases her level of implementation (friends). Concerning the potential for selection bias, the authors quantify how large the impacts (Frank 2000) of confounding variables must be to invalidate their inferences. In the discussion, the authors emphasize the changing nature of knowledge through the diffusion process.