Does Better Access to Disclosure Curb CEO Pay? Evidence from a Modern Information Technology Improvement

65 Pages Posted: 31 Jul 2023 Last revised: 13 Jan 2025

See all articles by Ilona Babenko

Ilona Babenko

Arizona State University

Benjamin Bennett

Tulane University - A.B. Freeman School of Business

Zexi Wang

Lancaster University

Date Written: May 3, 2024

Abstract

We provide evidence that better access to disclosure curbs CEO pay. Using a difference-indifferences estimation around the staggered implementation of the SEC EDGAR platform from 1993 to 1996, we find that total CEO pay drops by 7-15% following EDGAR implementation. This effect is more pronounced for highlypaid CEOs, equity-based pay, and firms with unions or those located in left-leaning states. Media coverage of executive pay increases following EDGAR adoption, particularly around proxy filing dates. Additionally, we find higher voluntary CEO turnover post-EDGAR, with the market showing a more negative response to CEO turnover announcements, suggesting negative implications for firm value.

Keywords: Executive compensation, disclosure, incentives, CEO turnover JEL codes: G30, G32

JEL Classification: G30, G32

Suggested Citation

Babenko, Ilona and Bennett, Benjamin and Wang, Zexi, Does Better Access to Disclosure Curb CEO Pay? Evidence from a Modern Information Technology Improvement (May 3, 2024). HKU Jockey Club Enterprise Sustainability Global Research Institute - Archive, Available at SSRN: https://ssrn.com/abstract=4523306 or http://dx.doi.org/10.2139/ssrn.4523306

Ilona Babenko

Arizona State University ( email )

Department of Finance
W.P. Carey School of Business
Tempe, AZ 85287
United States

Benjamin Bennett (Contact Author)

Tulane University - A.B. Freeman School of Business ( email )

7 McAlister Drive
New Orleans, LA 70118
United States

HOME PAGE: https://sites.google.com/site/benjaminbennettfinance/home

Zexi Wang

Lancaster University ( email )

Lancaster University Management School
Bailrigg
Lancaster, LA1 4YX
United Kingdom

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