The Economic Effects of Mandating Expanded Compensation Disclosures

82 Pages Posted: 25 Oct 2014 Last revised: 15 Feb 2017

See all articles by Brandon Gipper

Brandon Gipper

Stanford University Graduate School of Business

Date Written: Feburary 14, 2017


This paper analyzes the effects of mandating expanded, management compensation disclosures on compensation levels, cross-sectional and within-firm pay dispersion, and manager turnover. For identification, I use the introduction of the Compensation Discussion and Analysis (CD&A) in the 2007 proxy season, a significant expansion in the required disclosures related to compensation. The design uses the timing of the introduction date to compare manager pay at firms with and without the disclosure in a difference-in-differences analysis. I find evidence that disclosures are associated with increasing compensation. I corroborate this finding with the partial rollback of the CD&A allowed by the Jumpstart Our Business Startups Act in 2012. The CD&A introduction is associated with increases in pay dispersion, consistent with reduced compensation committee flexibility that increases payout risk to managers. From cross-sectional tests, compensation increases and turnover are higher for managers with shorter tenure and at smaller firms, consistent with these disclosures enhancing the job prospects of lesser-known managers. Entrenched and powerful managers do not have incremental pay increases with disclosures, inconsistent with expanded disclosures enabling rent extraction.

Keywords: Compensation, Compensation Discussion and Analysis, Disclosure, JOBS Act

JEL Classification: J33, J38, M12, M41

Suggested Citation

Gipper, Brandon, The Economic Effects of Mandating Expanded Compensation Disclosures (Feburary 14, 2017). Available at SSRN: or

Brandon Gipper (Contact Author)

Stanford University Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
(650)498-4350 (Phone)

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