Executive Pay and the Disclosure Environment: Canadian Evidence
Posted: 15 Jul 2000
We examine the economic consequences of the Ontario Securities Commission's requirement that firms disclose details of executive pay in proxy statements. Before 1993, Canadian firms only reported executive compensation in the aggregate. We predict the increased availability of compensation information will force boards of directors to compete in the managerial labor market by offering higher pay. We also predict public pressure on boards of directors to justify the level of executive pay will result in increased weight being placed on incentive pay. The data support these hypotheses. We also document that pay-performance sensitivity has increased.
JEL Classification: G30
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