Title:
The Effect of Accessibility of Status-Confirming Information on Investor Reactions to the Pay-Ratio Disclosure

dc.contributor.advisor Rupar, Kathy
dc.contributor.author Menon, Anish
dc.contributor.committeeMember Thayer, Jane
dc.contributor.committeeMember Venkataraman, Shankar
dc.contributor.committeeMember Kuang, Jason (Xi)
dc.contributor.committeeMember Moon, Robbie
dc.contributor.department Business
dc.date.accessioned 2023-09-06T19:44:41Z
dc.date.available 2023-09-06T19:44:41Z
dc.date.created 2022-08
dc.date.issued 2022-07-29
dc.date.submitted August 2022
dc.date.updated 2023-09-06T19:44:42Z
dc.description.abstract The SEC provides companies with considerable flexibility in the disclosure of the ratio between CEO and median employee compensation (pay-ratio). Prior research suggests that pay-ratio disclosures negatively affect investors’ support for executive compensation (SoP). Using two experiments, I find that accessibility of information that helps justify the gap between CEO and median employee compensation (status-confirming information) increases nonprofessional investors’ support for executive compensation (SoP support). Drawing on research in psychology, in experiment 1, I predict that accessibility of status-confirming information increases investors’ perceptions of meritocracy especially when the pay-ratio is higher than the peer companies which helps investors rationalize the compensation gap made salient by the pay-ratio. I find that investors’ perceptions of meritocracy positively influence their SoP support. However, accessibility of status-confirming information does not increase perceptions of meritocracy when pay-ratio is higher than peer companies. Additional analysis reveals that accessibility of status-confirming information does not significantly increase SoP support and perceptions of meritocracy in higher income participants’, suggesting that participants income levels could potentially affect their evaluation of the pay-ratio disclosure when status-confirming information is accessible. Since the analysis including income levels was conducted ex-post in Experiment 1, I conduct a second experiment to confirm my findings. In Experiment 2 I investigate whether participants’ perceptions of wealth impact their responses when the pay ratio is higher than peer companies. I find that investors’ perceptions of wealth and accessibility of status-confirming information affect both investors’ perceptions of meritocracy and SoP support when pay-ratio is higher than peer companies. Together, my findings provide evidence that the content of the pay-ratio disclosure apart from the disclosure itself could systematically affect investor decisions.
dc.description.degree Ph.D.
dc.format.mimetype application/pdf
dc.identifier.uri https://hdl.handle.net/1853/72631
dc.language.iso en_US
dc.publisher Georgia Institute of Technology
dc.subject Pay-ratio
dc.subject Wealth
dc.subject Meritocracy
dc.title The Effect of Accessibility of Status-Confirming Information on Investor Reactions to the Pay-Ratio Disclosure
dc.type Text
dc.type.genre Dissertation
dspace.entity.type Publication
local.contributor.advisor Rupar, Kathy
local.contributor.corporatename Scheller College of Business
relation.isAdvisorOfPublication b04f9a0a-9330-4e8e-9cca-fd2435757105
relation.isOrgUnitOfPublication a2f83831-ae41-4d65-82ff-c8bf95db4ffb
thesis.degree.level Doctoral
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