Regulation and post-crisis pay disclosure strategies of banks

The purpose of this paper is to examine how banks changed their executive pay disclosure practices in the aftermath of the global financial crisis. In particular, we examine banks’ response to regulations meant to curb banks’ short-term risk-taking incentives. We document that differences in the compliance strategies among banks are function of bank’s ownership structure and board governance. Using a unique hand-collected dataset, we find that foreign-controlled banks disclose significantly more on executive compensation than do nonforeign-controlled banks. Also, banks with high pension fund ownership adopt a higher level of disclosures. Foreign-controlled banks undertake more voluntary disclosure on executive compensation than do nonforeign-controlled banks. We go further and we test the moderating effect of board compensation committee meetings on the relationship between bank ownership and disclosure. We document that more frequent meetings of the compensation committee increase the executive pay disclosure. We find that the incremental effect of more frequent compensation committee meetings on disclosure is lower for foreign-controlled and for banks with a higher ownership of pension funds. These results may suggest that the board compensation committee matters less for foreign-controlled banks as they are already committed to disclose.