Voluntary Performance Disclosures in the CD&A

• 成果类型: Article
• 署名作者: Packard, Heidi A.; Pawliczek, Andrea; Skinner, A. Nicole
• 署名单位: University of Michigan System; University of Michigan; University of Colorado System; University of Colorado Boulder; University System of Georgia; University of Georgia
• 刊物名称: ACCOUNTING REVIEW
• ISSN/ISSBN: 0001-4826
• DOI: 10.2308/TAR-2021-0181
• 发表日期: 2023
• 页码: 435-466
• 关键词: say-on-pay; institutional investors; compensation evidence; corporate governance; INFORMATION; Managers; association; forecasts; analysts; MARKET

摘要

This paper examines voluntary disclosure in the context of shareholder scrutiny of executive compensation contracts. We find that firms voluntarily increase discussion of their performance within their CD&A disclosures when peer-benchmarked compensation relative to performance is high. In contrast, we do not find a similar increase in performance discussion in the corresponding MD&A disclosures, which suggests that the effect is not driven by firms' general disclosure practices. We also find that the relation between relatively high compensation and CD&A performance disclosure strengthens following the implementation of mandatory Say-on-Pay, which increased costs associated with investor criticism of pay. These disclosures appear to be used effectively to avoid negative compensation assessments, in that they are associated with higher levels of shareholder and proxy advisor approval. Altogether, our findings suggest that CD&A performance disclosures allow firms to communicate the context of their compensation choices to improve shareholder opinions of pay.