Is Disclosure an Effective Cleansing Mechanism? The Dynamics of Compensation Peer Benchmarking

  title={Is Disclosure an Effective Cleansing Mechanism? The Dynamics of Compensation Peer Benchmarking},
  author={Michael W. Faulkender and J. Yang},
  journal={AFA 2013 San Diego Meetings (Archive)},
  • Michael W. Faulkender, J. Yang
  • Published 2012
  • Business
  • AFA 2013 San Diego Meetings (Archive)
  • Firms routinely justify CEO compensation by benchmarking against companies with highly paid CEOs. We examine whether the 2006 regulatory requirement of disclosing compensation peers mitigated firms' opportunistic peer selection activities. We find that strategic peer benchmarking did not disappear after enhanced disclosure. In fact, it intensified at firms with low institutional ownership, low director ownership, low CEO ownership, busy boards, large boards, and non-intensive monitoring boards… CONTINUE READING
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