Abstract
Using the number of analysts and media coverage as the proxies for information amount and the dispersion of analysts’ forecasts and earnings volatility as the measurements for information quality, we show that the total levels of CEOs compensation increase with the increase in the amount of and the quality of information disclosure, and that there is an overall increase in CEO compensation after SOX. We further show that it is the equity-based compensation that drives our result. Firm has increased the equity-based CEO compensation, but not the non-equity-based CEO compensation in the post-SOX period. Our results suggest that information discourse has a significant impact on the structure and size of CEO compensation.
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