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Voluntary disclosure, excess executive compensation, and firm value

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  • Chung, Huimin
  • Judge, William Q.
  • Li, Yi-Hua

Abstract

This study refines and extends Anglo-American research exploring excess executive compensation and its effects on firm value using data from Taiwan, a country in which the board members and executives of a firm often have friendly relations with one another. We find that excess executive compensation is negatively related to firm value but that voluntary disclosure practices moderate this relationship. Specifically, our results indicate that excess executive compensation has a positive effect on firm value when firms disclose comprehensive information voluntarily and that this effect is more pronounced in group-affiliated firms. Moreover, firms that provide comprehensive voluntary disclosure appear to alleviate agency problems more efficiently when their controlling shareholders have higher private benefit incentives or when these firms have higher quality corporate governance.

Suggested Citation

  • Chung, Huimin & Judge, William Q. & Li, Yi-Hua, 2015. "Voluntary disclosure, excess executive compensation, and firm value," Journal of Corporate Finance, Elsevier, vol. 32(C), pages 64-90.
    • Handle: RePEc:eee:corfin:v:32:y:2015:i:c:p:64-90
    DOI: 10.1016/j.jcorpfin.2015.04.001
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    More about this item

    Keywords

    Disclosure; Corporate governance; Compensation; Agency conflict; Information asymmetry;
    All these keywords.

    JEL classification:

    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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