Comprehensive Disclosure of Compensation and Firm Value: The Case of Policy Reforms in an Emerging Market

ABSTRACT This paper analyzes the association between voluntary disclosure of compensation and firm value based on the notion that comprehensive information on compensation provides higher transparency signals and lower agency conflict. The evidence shows that firms voluntarily disclosing comprehensive information on director and executive compensation are evaluated with higher market value. However, the compensation disclosure provided by firms using large proportion of reserved bonus and the medium or minimal disclosure help fewer for the market value creation. Furthermore, when the level of board independence is lower, that is, the ownership is concentrated or the board is controlled by fewer outsiders, firms tend not to disclose such comprehensive information.