Reporting Choice and the 1992 Proxy Disclosure Rules
Posted: 30 Oct 1995
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Reporting Choice and the 1992 Proxy Disclosure Rules
Abstract
Disclosure rules adopted by the Securities Exchange Commission in 1992 allowed limited managerial discretion in reporting the value of stock options granted. I provide evidence that managers adopted valuation methodologies that reduced reported or perceived compensation and that also reduced potential accounting charges for stock options. I interpret this evidence as supporting the hypothesis that managers bear non-pecuniary costs from high reported levels of compensation--through increased political or shareholder pressure--and adopt reporting methodologies that reduce these costs.
JEL Classification: G18, M41
Suggested Citation: Suggested Citation