The determinants of compensation report transparency: manager incentives and firm characteristics

Iris Pfeiffer () and Svenja Jarchow ()
Additional contact information
Iris Pfeiffer: Technical University Munich (TUM)
Svenja Jarchow: Technical University Munich (TUM)

Journal of Business Economics, 2024, vol. 94, issue 4, No 5, 659-691

Abstract: Abstract This paper analyses the determinants of disclosure in compensation reports. Using a hand-collected dataset of 429 observations we assess which compensation, governance and ownership variables influence the quality of disclosure in compensation reports from 2006 to 2014 in a German setting. Managers have incentives to conceal compensation disclosure leading to a conflict of interest with shareholders. The overall findings suggest that opportunistic reporting incentives, as proposed by the managerial power theory, cannot explain a lack of more detailed disclosure. Managers rather avoid these disclosures because they would require additional effort. The empirical analyses reveal four major disclosure determinants: company size, age, family members in the boards and verticality. Other variables such as proprietary costs, governance variables and performance show no or no stable influence. The absence of disclosure is therefore a confluence of company resources (company size and forecasts increase disclosure), owner interests (family members in the board decreases disclosure), and concerns about social equity infringement (higher pay inequity leads to lower disclosure).

Keywords: Executive compensation; Excessive compensation; Compensation disclosure; Corporate governance (search for similar items in EconPapers)
JEL-codes: G30 J33 M12 M52 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s11573-023-01180-6 Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:spr:jbecon:v:94:y:2024:i:4:d:10.1007_s11573-023-01180-6

Ordering information: This journal article can be ordered from
http://www.springer.com/journal/11573

DOI: 10.1007/s11573-023-01180-6

Access Statistics for this article

Journal of Business Economics is currently edited by Günter Fandel

More articles in Journal of Business Economics from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().