Determinants of Disclosure Noncompliance and the Effect of the SEC Review: Evidence from the 2006 Mandated Compensation Disclosure Regulations

Posted: 1 Sep 2009 Last revised: 27 Jun 2011

See all articles by John R. Robinson

John R. Robinson

Texas A&M University; Texas A&M University - Department of Accounting

Yanfeng Xue

George Washington University - Department of Accountancy

Yong Yu

University of Texas at Austin

Multiple version iconThere are 2 versions of this paper

Date Written: February 12, 2011

Abstract

We investigate the economic forces that influence noncompliance with mandatory compensation disclosures and the effect of a subsequent focused enforcement action. We utilize SEC evaluations of compensation disclosures mandated by rules adopted in 2006 to examine whether noncompliance is associated with excess CEO compensation, proprietary costs, or previous media attention. We further test whether subsequent CEO compensation declines after the SEC publicly identifies noncompliance. We construct measures of defective disclosures from SEC critiques and find that disclosure defects are positively associated with excess CEO compensation and media criticism of CEO compensation during the previous year. We find no evidence supporting the contention that compensation disclosure defects are associated with proprietary costs. Furthermore, we are unable to document that the level of disclosure defects identified by the SEC is associated with a reduction in excess CEO compensation in the subsequent year.

Keywords: Executive compensation, mandatory disclosures, noncompliance.

JEL Classification: M52, G32, G38

Suggested Citation

Robinson, John R. and Xue, Yanfeng and Yu, Yong, Determinants of Disclosure Noncompliance and the Effect of the SEC Review: Evidence from the 2006 Mandated Compensation Disclosure Regulations (February 12, 2011). Accounting Review, Forthcoming, Available at SSRN: https://ssrn.com/abstract=1465070

John R. Robinson

Texas A&M University ( email )

mail stop 4353
Mays School of Business
college state, TX 77843-4353
United States
979-845-3457 (Phone)
979-845-0028 (Fax)

Texas A&M University - Department of Accounting ( email )

430 Wehner
College Station, TX 77843-4353
United States

Yanfeng Xue

George Washington University - Department of Accountancy ( email )

School of Business and Public Management
Washington, DC 20052
United States

Yong Yu (Contact Author)

University of Texas at Austin ( email )

1 University Station B6400
Austin, TX 78712
United States
(512)471-6714 (Phone)
(512)471-3904 (Fax)

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