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Role of corporate governance in mitigating the selective disclosure of executive stock option information

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  • Jodie Nelson
  • Gerry Gallery
  • Majella Percy

Abstract

We examine the nature and extent of statutory executive stock option disclosures by Australian listed companies over the 2001–2004 period, and the influence of corporate governance mechanisms on these disclosures. Our results show a progressive increase in overall compliance from 2001 to 2004. However, despite the improved compliance, the results reveal managements’ continued reluctance to disclose more sensitive executive stock option information. Factors associated with good internal governance, including board independence, audit committee independence and effectiveness, and compensation committee independence and effectiveness are found to contribute to improved compliance. Similarly, certain external governance factors are associated with improved disclosure, including external auditor quality, shareholder activism (as proxied by companies identified as poor performers by the Australian Shareholders’ Association) and regulatory intervention.

Suggested Citation

  • Jodie Nelson & Gerry Gallery & Majella Percy, 2010. "Role of corporate governance in mitigating the selective disclosure of executive stock option information," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 50(3), pages 685-717, September.
    • Handle: RePEc:bla:acctfi:v:50:y:2010:i:3:p:685-717
    DOI: 10.1111/j.1467-629X.2009.00339.x
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    9. Agata Wieczorek, 2022. "The transparency of remuneration policy in financial holding companies based on the example of the UniCredit Group," Journal of Banking Regulation, Palgrave Macmillan, vol. 23(2), pages 173-198, June.
    10. Alexander Merz, 2020. "Expensing performance-vested executive stock options: is there underreporting under IFRS 2?," Journal of Business Economics, Springer, vol. 90(3), pages 461-493, April.
    11. Kanapathippillai, Sutharson & Johl, Shireenjit K. & Wines, Graeme, 2016. "Remuneration committee effectiveness and narrative remuneration disclosure," Pacific-Basin Finance Journal, Elsevier, vol. 40(PB), pages 384-402.
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    17. Melis, Andrea & Gaia, Silvia & Carta, Silvia, 2015. "Directors' remuneration: A comparison of Italian and UK non-financial listed firms' disclosure," The British Accounting Review, Elsevier, vol. 47(1), pages 66-84.
    18. Thi H.H. Nguyen & Mohamed H. Elmagrhi & Collins G. Ntim & Yue Wu, 2021. "Environmental performance, sustainability, governance and financial performance: Evidence from heavily polluting industries in China," Business Strategy and the Environment, Wiley Blackwell, vol. 30(5), pages 2313-2331, July.
    19. Ala’ Hussein Albawwat & Mohamad Yazis Ali Basah, 2015. "The Impact of Shariah Approved Companies on the Relationship between Corporate Governance Structure and Voluntary Disclosure of Interim Financial Reporting in Jordan," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 5(2), pages 66-85, April.
    20. Kanapathippillai, Sutharson & Gul, Ferdinand & Mihret, Dessalegn & Muttakin, Mohammad Badrul, 2019. "Compensation committees, CEO pay and firm performance," Pacific-Basin Finance Journal, Elsevier, vol. 57(C).
    21. Chiraz Ben Ali, 2014. "Corporate Governance, Principal-Principal Agency Conflicts, and Disclosure," Working Papers 2014-125, Department of Research, Ipag Business School.
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    25. Sutharson Kanapathippillai & Dessalegn Mihret & Shireenjit Johl, 2019. "Remuneration Committees and Attribution Disclosures on Remuneration Decisions: Australian Evidence," Journal of Business Ethics, Springer, vol. 158(4), pages 1063-1082, September.

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