Year: 2012
Type: article
Abstract: ABSTRACT Public policy discussions typically favor greater corporate disclosure as a way to reduce firms' agency problems. This argument is incomplete because it overlooks that better disclosure regimes can also aggravate agency problems and related costs, including executive compensation. Consequently, a point can exist beyond which additional disclosure decreases firm value. Holding all else equal, we further show that larger firms will adopt stricter disclosure rules than smaller firms and firms with better disclosure will employ more able management. We show that mandated increases in disclosure could, in part, explain recent increases in both CEO compensation and CEO turnover rates.
Source: The Journal of Finance
Authors: BENJAMIN E. HERMALIN, MICHAEL S. WEISBACH
Institutions: Franklin W. Olin College of Engineering, University of Illinois Urbana-Champaign, The University of Queensland, La Trobe University, University of California System, Yale University, University of Illinois Chicago, University of Chicago, Institute for Financial Research, The Ohio State University, London Business School, University of California, Berkeley
Language: English
Subfield: Accounting
Domain: Social Sciences
Open Access status: bronze
OpenAlex ID: W4246717364