IDEAS home Printed from https://ideas.repec.org/a/bla/jbfnac/v50y2023i9-10p1633-1670.html
   My bibliography  Save this article

Perils of limiting the coverage of mandatory pay disclosure: The Korean experience

Author

Listed:
  • Jinhyeok Ra
  • Woochan Kim

Abstract

In 2013, Korea adopted a mandatory pay disclosure rule applicable only to board members paid above a certain threshold (KRW 500 million, roughly equal to USD 5 million). In this study, we find evidence of Korean executives avoiding disclosure through director deregistration, that is, stepping down from the board, but retaining a non‐registered executive position in the same company. This tendency is stronger when deregistration cost is low (in case of family executives), and benefit is high (in case of high executive‐to‐worker pay ratios). We also find that family executives choose pay cuts over deregistration as means of avoidance when their income loss from pay cuts is relatively low. Last, we find that disclosure avoidance prompts negative share price reactions, leads to higher dividend payouts (in case of large pay cuts) and results in smaller board sizes (in case of family deregistration).

Suggested Citation

  • Jinhyeok Ra & Woochan Kim, 2023. "Perils of limiting the coverage of mandatory pay disclosure: The Korean experience," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 50(9-10), pages 1633-1670, October.
    • Handle: RePEc:bla:jbfnac:v:50:y:2023:i:9-10:p:1633-1670
    DOI: 10.1111/jbfa.12671
    as

    Download full text from publisher

    File URL: https://doi.org/10.1111/jbfa.12671
    Download Restriction: no
    File URL: https://libkey.io/10.1111/jbfa.12671?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:jbfnac:v:50:y:2023:i:9-10:p:1633-1670. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=0306-686X .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.