IDEAS home Printed from https://ideas.repec.org/a/taf/euract/v31y2022i5p1089-1118.html
   My bibliography  Save this article

SEC Compensation-related Comment Letters and Excess CEO Compensation

Author

Listed:
  • Weixiao Wang
  • Lijuan Zhang
  • Mark Wilson
  • Tejshree Kala

Abstract

We examine the impact of compensation-related comment letters (hereafter CCLs) issued by the U.S. Securities and Exchange Commission (the SEC) on excess chief executive officers’ (CEO) compensation. We find that changes in compensation in the two-year window surrounding the release of CCLs are negatively associated with the number of disclosure defects identified in CCLs, and that this association is driven by defects that relate directly to pay or the method by which it was determined, rather than broader governance- or readability-related defects. Cross-sectional analyses suggest that the negative impact of a CCL on excess CEO compensation is concentrated in firms with overpaid CEOs and less powerful CEOs. We further show that total disclosure defects, pay-related defects and governance-related defects are positively associated with the likelihood that the subject firm experiences low shareholder support in subsequent ‘say-on-pay’ votes, suggesting that enhanced visibility of excess pay and resulting shareholder activism may be one channel through which pressure is brought to bear on firms to reduce excess compensation.

Suggested Citation

  • Weixiao Wang & Lijuan Zhang & Mark Wilson & Tejshree Kala, 2022. "SEC Compensation-related Comment Letters and Excess CEO Compensation," European Accounting Review, Taylor & Francis Journals, vol. 31(5), pages 1089-1118, October.
    • Handle: RePEc:taf:euract:v:31:y:2022:i:5:p:1089-1118
    DOI: 10.1080/09638180.2022.2046120
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/09638180.2022.2046120
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/09638180.2022.2046120?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
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    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:taf:euract:v:31:y:2022:i:5:p:1089-1118. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/REAR20 .

    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.