Economic consequences of regulated changes in disclosure: the case of executive compensation

Economic consequences of regulated changes in disclosure: the case of executive compensation The 1992 revision of executive compensation disclosure rules in the U.S. could have benefited shareholders by inducing corporate governance improvements or harmed them by increasing disclosure costs. Consistent with the governance improvement hypothesis, companies that lobbied against the regulation had, relative to control firms: (i) return-on-assets and return-on-equity that improved by 0.5% and 3%, respectively; and (ii) excess stock returns of 6% over the 8-month period between the announcement and the adoption of the proposed regulation. Also, firms lobbying more vigorously against the proposal had more positive abnormal stock returns during events that increased the probability of regulation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Accounting and Economics Elsevier

Economic consequences of regulated changes in disclosure: the case of executive compensation

Journal of Accounting and Economics, Volume 35 (3) – Aug 1, 2003

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Publisher
Elsevier
Copyright
Copyright © 2003 Elsevier Ltd
ISSN
0165-4101
DOI
10.1016/S0165-4101(03)00035-1
Publisher site
See Article on Publisher Site

Abstract

The 1992 revision of executive compensation disclosure rules in the U.S. could have benefited shareholders by inducing corporate governance improvements or harmed them by increasing disclosure costs. Consistent with the governance improvement hypothesis, companies that lobbied against the regulation had, relative to control firms: (i) return-on-assets and return-on-equity that improved by 0.5% and 3%, respectively; and (ii) excess stock returns of 6% over the 8-month period between the announcement and the adoption of the proposed regulation. Also, firms lobbying more vigorously against the proposal had more positive abnormal stock returns during events that increased the probability of regulation.

Journal

Journal of Accounting and EconomicsElsevier

Published: Aug 1, 2003

References

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