Equity-Based Compensation of Outside Directors and CorporateDisclosure Quality

• 成果类型: Article
• 署名作者: Sengupta, Partha; Zhang, Suning
• 署名单位: United States Department of the Treasury; Office of the Comptroller of the Currency; George Mason University
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1111/1911-3846.12115
• 发表日期: 2015
• 页码: 1073-1098
• 关键词: MANAGEMENT EARNINGS FORECASTS; financial accounting information; institutional investors; SHAREHOLDER LITIGATION; voluntary disclosure; Audit committee; cost; ask; incentives; diversification

摘要

We examine the relationship between a firm's disclosure quality and equity-based compensation of independent members of the board of directors. The dimensions of disclosure quality we focus on are management's earnings guidance and information flowthrough financial analysts. Using both levels and changes specifications, we find the average ratio of equity-based pay to total pay of independent board members to be positively related to a firm's disclosure quality. Our findings are robust to the inclusion of management's equity-based compensation, other governance measures, and financial controls, and robust to instrumental variable tests of endogeneity. Furthermore, we find directors' equity-based compensation to be negatively associated with the firm's cost of equity capital. Our results are consistent with equity-based compensation providing incentives to independent directors to push for better disclosure quality.