EXECUTIVE PAY AND THE DISCLOSURE ENVIRONMENT: CANADIAN EVIDENCE

We examine the economic consequences of the Ontario Securities Commission's requirement that firms disclose details of executive pay in proxy statements. Before 1993, Canadian firms only reported executive compensation in the aggregate. We predict the increased availability of compensation info...

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Bibliographic Details
Published in:The Journal of financial research 2001, Vol.24 (3), p.347-365
Main Authors: Park, Yun W., Nelson, Toni, Huson, Mark R.
Format: Article
Language:English
Subjects:
Accounting
Boards of directors
Chief executive officers
Commercial law
Corporate governance
Disclosure
Economics
Executive compensation
Financial management
Financial performance
Hypotheses
Incentives
Political economy
Proxy statements
R&D
Research & development
Stock exchanges
Stockholders
Studies
Wages & salaries
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Summary:We examine the economic consequences of the Ontario Securities Commission's requirement that firms disclose details of executive pay in proxy statements. Before 1993, Canadian firms only reported executive compensation in the aggregate. We predict the increased availability of compensation information will force boards of directors to compete in the managerial labor market by offering higher pay. We also predict public pressure on boards of directors to justify the level of executive pay will result in increased weight on incentive pay. The data support these hypotheses. We also document that pay‐performance sensitivity has increased. JEL classification: G30
ISSN:0270-2592
1475-6803
DOI:10.1111/j.1475-6803.2001.tb00774.x