N'guessan, Kevin, Ibrahim, Salma, Elmarzouky, Mahmoud and Zhao, Jinsha (2023) Reading between the lines of the compensation report : does excessive CEO pay matter? In: 45th European Accounting Association Annual Congress; 24 - 26 May 2023, Helsinki / Espop, Finland. (Unpublished)

Abstract

This paper examines the relationship between the readability of the compensation report and the chief executive officer's (CEO) excessive compensation. Two competing hypotheses are presented. The first is based on the opportunistic view that managers with excessive pay obfuscate executive compensation disclosures. The second is based on legitimacy theory, whereby managers with excessive pay prefer to explain the pay through a more readable compensation report. Based on a sample of UK FTSE 350 firms between 2011 and 2019, we find that the compensation report in cases of excessive CEO pay is more readable in line with the legitimacy theory. The results are driven by CEOs that are overpaid rather than underpaid. We run various robustness tests and found similar results. The findings have implications for regulators and investors who seek to understand the role of compensation in disclosure decisions

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Item Type:	Conference or Workshop Item (Paper)
Event Title:	45th European Accounting Association Annual Congress
Organising Body:	European Accounting Association
Research Area:	Research Areas > Accounting and finance
Faculty, School or Research Centre:	Kingston Business School Kingston Business School > Department of Accountancy, Finance and Informatics
Date Deposited:	21 Aug 2023 12:03
Last Modified:	21 Aug 2023 12:03
URI:	https://eprints.kingston.ac.uk/id/eprint/54257

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