Corporate Board Governance and Voluntary Disclosure of Executive Compensation Practices

• 成果类型: Article
• 署名作者: Laksmana, Indrarini
• 署名单位: University System of Ohio; Kent State University; Kent State University Kent; Kent State University Salem
• 刊物名称: CONTEMPORARY ACCOUNTING RESEARCH
• ISSN/ISSBN: 0823-9150
• DOI: 10.1506/car.25.4.8
• 发表日期: 2008
• 页码: 1147-+
• 关键词: AUDIT COMMITTEE; OWNERSHIP; determinants; association; management; DIRECTORS; CONSEQUENCES; COMPETITION; BUSINESS; MARKET

摘要

This study examines whether certain board and compensation committee characteristics, as proxies for board governance quality, are associated with the extent of board disclosure of executive compensation practices. A unique feature of this study is the development of a disclosure index using 23 compensation-related disclosures. I validate this index by showing that the disclosure scores are inversely related to two measures of information asymmetry: bid-ask spread and return volatility. This provides evidence that greater compensation disclosure reduces information asymmetry. The study presents some evidence that boards with the power to act independently from management provide more disclosure. In addition, it contributes to the literature on corporate governance and voluntary disclosure by showing that board disclosure increases with the amount of time and resources dedicated to board (compensation committee) duties. More specifically, boards with lower meeting frequency and those with fewer directors serving on them are associated with less transparency of compensation practices.