Executive Pay and the Disclosure Environment: Canadian Evidence

Park, Yun W.; Nelson, Toni; Huson, Mark R.

doi:10.1111/j.1475-6803.2001.tb00774.x

Cited by 55 publications

(42 citation statements)

References 19 publications

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“…Despite the perceived merits, however, much remains to be understood regarding the impact of disclosure obligations on executive compensation, because changes to executive compensation disclosure seldom occur. Nevertheless, inferences may be made by considering the result of studies that consider the effect of different disclosure regimes on executive compensation in the United States (i.e., Ke, Petroni, and Safieddine 1999;Murphy 1996;Vafeas and Afxentiou 1998) and in Canada, which has recently implemented regulation 638 (i.e., Park, Nelson, and Huson 2001). Ke et al (1999) compare the sensitivity of executive compensation to accounting performance for publicly held and privately held U.S. insurance firms, which differ according to the level of disclosure of executive compensation.…”

Section: Executive Compensation and Disclosure: Overview Of Prior Finmentioning

confidence: 99%

“…In light of this methodological concern, it is difficult to conclude about the existence of a cause-effect relation between SEC disclosure regulation changes and executive compensation shifts. Park et al (2001) consider the association between mandated disclosure and executive compensation using 1991 -97 Canadian data resulting from regulation 638. They find that mandated executive compensation disclosure translates into an increase in executive compensation and in the use of performance-contingent incentives.…”

Section: Executive Compensation and Disclosure: Overview Of Prior Finmentioning

confidence: 99%

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The Impact of Mandated Disclosure on Performance‐Based CEO Compensation*

Craighead

Magnan²,

Thorne

2004

Contemporary Accting Res

117

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Regulators argue that mandated compensation disclosure improves corporate governance by permitting shareholders to enjoin boards of directors to reward executives in ways that are consistent with shareholder value creation. We posit that mandated compensation disclosure, or the absence thereof, has a greater impact on the CEO compensation practices of widely held firms than of closely held firms. More specifically, we expect that, in the absence of mandated disclosure, CEO compensation is likely to be less performance‐contingent among widely held firms than among closely held firms. Moreover, we also expect that the advent of mandated disclosure leads widely held firms to increase the extent to which CEO compensation is performance‐contingent, much more so than closely held firms would. We use a unique data base resulting from the Ontario Securities Commission amendment of regulation 638 in October 1993. For the first time, this amendment required firms listed on the Toronto Stock Exchange to provide detailed executive compensation data similar to those required by the Securities and Exchange Commission, for the current year as well as retroactively for the previous two years. We find that, in the absence of mandated disclosure, CEO cash compensation in widely held firms is less performance‐contingent than in closely held firms. With the imposition of mandated disclosure, performance‐contingent cash compensation increases more in widely held firms than in closely held firms. Results with respect to stock option grants are mixed, with both closely held and widely held firms reacting to the advent of mandated disclosure.

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Section: Executive Compensation and Disclosure: Overview Of Prior Finmentioning

confidence: 99%

Section: Executive Compensation and Disclosure: Overview Of Prior Finmentioning

confidence: 99%

The Impact of Mandated Disclosure on Performance‐Based CEO Compensation*

Craighead

Magnan²,

Thorne

2004

Contemporary Accting Res

117

View full text Add to dashboard Cite

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“…Firms that lobbied against the 1992 tightening of U.S. disclosure rules had positive stock returns when the new rules were adopted, suggesting that the rules addressed a governance problem for these …rms (Lo, 2003). CEO pay tends to become more closely linked to performance following improved disclosure (Park, Nelson, and Huson, 2001). However, if anything, pay levels rise (Park, Nelson, and Huson, 2001;Balsam, Gordon, and Li, 2016;Gipper, 2016;Mas, 2016), potentially because executives can more easily see what their peers receive.…”

Section: Potential Areas For Reformmentioning

confidence: 99%

“…CEO pay tends to become more closely linked to performance following improved disclosure (Park, Nelson, and Huson, 2001). However, if anything, pay levels rise (Park, Nelson, and Huson, 2001;Balsam, Gordon, and Li, 2016;Gipper, 2016;Mas, 2016), potentially because executives can more easily see what their peers receive. For example, the increased disclosure of perks due to the SEC's 1978 rules was followed by a marked increase in the use of perks.…”

Section: Potential Areas For Reformmentioning

confidence: 99%

Executive Compensation: A Survey of Theory and Evidence

Edmans¹,

Gabaix²,

Jenter³

2017

SSRN Journal

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Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in der dort genannten Lizenz gewährten Nutzungsrechte. This paper reviews the theoretical and empirical literature on executive compensation. We start by presenting data on the level of CEO and other top executive pay over time and across firms, the changing composition of pay; and the strength of executive incentives. We compare pay in U.S. public firms to private and non-U.S. firms. We then critically analyze three non-exclusive explanations for what drives executive pay -shareholder value maximization by boards, rent extraction by executives, and institutional factors such as regulation, taxation, and accounting policy. We confront each hypothesis with the evidence. While shareholder value maximization is consistent with many practices that initially seem inefficient, no single explanation can account for all facts and historical trends; we highlight major gaps for future research. We discuss evidence on the effects of executive pay, highlighting recent identification strategies, and suggest policy implications grounded in theoretical and empirical research. Our survey has two main goals. First, we aim to tightly link the theoretical literature to the empirical evidence, and combine the insights contributed by all three views on the drivers of pay. Second, we aim to provide a user-friendly guide to executive compensation, presenting shareholder value theories using a simple unifying model, and discussing the challenges and methodological issues with empirical research. JEL-Codes: D310, D860, G340, M120. Terms of use: Documents in

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“…It is also reasonable to extend these “two worlds” even further. For example, research indicates that executive labour market issues play an important role in determining CEO remuneration levels (Ezzamel and Watson, 1998; Murphy and Zabojnik, 2004; Park et al , 2001). Again, these are issues strongly borne out in the writer's interview data:…”

Section: Why Does Ceo Pay Research Lack Convergence?mentioning

confidence: 99%

A Priori Conceptions, Methodological Dogmatism and Theory versus Practice: three reasons why CEO pay research lacks convergence

O'Neill

2007

Corporate Governance

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"Pay Without Performance: The Unfilled Promise of Executive Compensation" by Lucian Bebchuk and Jesse Fried (Harvard University Press, 2004) challenges the view that executive remuneration arrangements are designed to maximise shareholder value. The authors argue that managerial power results in remuneration being structured to benefit executives at the expense of shareholders. This paper contends that Bebchuk and Fried's approach illustrates issues that contribute to the problematic nature of executive remuneration research. In particular, it is proposed that a priori conceptions about executive remuneration, methodological dogmatism in research approaches and a significant gap between theory and practice, each contribute to the lack of convergence in executive pay research. Illustrative data taken from interview-based research conducted with Australian non-executive directors supports the view that reliance on economic efficiency arguments alone does not provide a sufficient framework to explain the subjective, judgemental and socially interactive processes involved in determining executive pay. Copyright (c) 2007 The Author; Journal compilation (c) 2007 Blackwell Publishing Ltd.

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Executive Pay and the Disclosure Environment: Canadian Evidence

Cited by 55 publications

References 19 publications

The Impact of Mandated Disclosure on Performance‐Based CEO Compensation*

The Impact of Mandated Disclosure on Performance‐Based CEO Compensation*

Executive Compensation: A Survey of Theory and Evidence

A Priori Conceptions, Methodological Dogmatism and Theory versus Practice: three reasons why CEO pay research lacks convergence

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