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EXECUTIVE PAY AND THE DISCLOSURE ENVIRONMENT: CANADIAN EVIDENCE
Author(s) -
Park Yun W.,
Nelson Toni,
Huson Mark R.
Publication year - 2001
Publication title -
journal of financial research
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.319
H-Index - 49
eISSN - 1475-6803
pISSN - 0270-2592
DOI - 10.1111/j.1475-6803.2001.tb00774.x
Subject(s) - executive compensation , proxy (statistics) , commission , incentive , business , pay for performance , accounting , compensation (psychology) , actuarial science , finance , economics , microeconomics , psychology , machine learning , computer science , psychoanalysis
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