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Presentation/PPT
27/08/2022
Corporate entities are owned by shareholders who appoint and delegate operating authority and managerial control to top management in return for compensation. This separation of ownership and management creates problems, such as conflict of interest misaligning shareholder’s interests. Moreover, the management may use their authority to pay themselves excessive compensation while they fail to create or maximize shareholder value. Consequently, the managers may conceal the details of this disproportionate remuneration, especially for the Chief Executive Directors (CEO), leading to the issue of a lack of transparency, which raises concerns with the shareholders, investors, and the public. This dearth of transparency compels regulatory authorities like the Security and Exchange Commission (SEC) to adopt disclosure rules focusing on expanding transparency of CEO pay and firm performance. Therefore, addressing the above business concern through research study is necessary because it enhances corporate governance and builds the trust and confidence of the shareholders, prospective investors, workforce, the public, and regulators.
I developed my research interest in studying corporate governance, which appeared to be a broad research topic. After discussing my research ideas with my supervisor at the workplace, I narrowed my research topic to “Exploring the impact of SEC corporate disclosure on the equity market.” That is, developing my research problem has helped me identify a specific issue that I want to address through a research study from real-life problems found in my workplace. The next thing is to conduct a literature review or look for relevant articles about my research problem to help provide a background perspective, identify the appropriate methodologies, and discover a developed theoretical or conceptual framework to serve as the foothold for the current study. In addition, I need to consider the methodology, the data type, and the analysis technique to adopt for resolving my research problem.
Adopting a quantitative approach will enable me to predict the effect using stock market returns (Creswell & Creswell, 2023). In addition, exploring my research problem using stock market data, sampled firms, and quantitative methodology might enhance the corporate governance system in aligning shareholder interests, promoting effective management, and ensuring accountability of boards, especially when determining excessive CEO compensation. Furthermore, it might enhance compensation disclosure transparency of executive pay and firm performance, making it easier for investors to make rational investment decisions, alleviating abuse of investors’ assets, and strengthening public confidence (Yang, 2021).
References
Creswell, J. W., & Creswell, J. D. (2023). Research Design (6th ed.). SAGE Publications, Inc.
Yang, Z. (2021). Determinants of Compensation Disclosure: Evidence From Reg. SK 402 (b). Journal of Accounting, Auditing & Finance, 36(2), 329–352
Week two response two
The issue of excessive executive compensation packages not accurately reflecting the firm’s performance and the dearth of transparency of disclosed details have been ongoing apprehensions for the owners of public firms in the United States of America (U.S.A.) and around the globe. In addition, this problem continues to emerge due to the lack of corporate accountability and responsibility, creating a growing concern for the shareholders, investors, and the public, leading to a loss of confidence in public firms’ management. For example, the series of corporate scandals and global financial crises, such as the Enron scandal in the U.S.A., affected the stock market, creating a big issue for investors and regulators. All these problems stem from the separation of ownership and control, which creates issues, such as conflict of interest misaligning shareholder’s interests (Akumaning. 2023).
Executive compensation is crucial for corporate governance because it significantly impacts a company’s performance and growth. Consequently, if this problem is not immediately and adequately addressed, it can adversely affect the financial performance of public companies, causing rippling effects on the owners, workforce, and government. For example, suppose nothing is done to address this concern, especially by the regulators. In that case, it might result in the winding up of the business, creating unemployment problems, loss of tax revenue, and legal matters.
While there might be substantial research on executive remuneration, there is limited research on compensation disclosure that specifically addresses the stock market participants’ reactions to the events associated with the Securities and Exchange Commission’s (SEC’s) recent corporate disclosure regulations on executive remuneration within the context of the U.S.A. Unquestionably, this problem fills a gap in existing research that needs to be explored. Accordingly, the objective of this paper is to use stock market returns to measure shareholder reactions to the increased compensation disclosure policy for public companies in the U.S.A.
My study will cover all American public firms that must report to the Securities and Exchange Commission (“SEC”). Data on these firms will be collected from existing databases from 2021 to 2023, given that various publications mainly occurred in 2022. The dependent variable will be abnormal return, and independent variables will include dummy variables: market return, market index, market risk, book-to-market value ratio, market capitalization, and momentum. Also, I will adopt the quantitative approach and correctional research design (Creswell & Creswell, 2023) since the intent is to predict and determine the relationship between the variables. However, much of my work will depend on guidance and feedback from my Doctoral Project Committee Members.
Addressing the above business problem through a research study is necessary because it will not only enhance corporate governance and build the trust and confidence of the shareholders, but it will also provide owners with much-required insights to help them understand public firms’ process of communicating governance and corporate performance and assess their decision-making about executive compensation. I look forward to working with my Doctoral Project Committee Members to have a successful dissertation.
References
Creswell, J. W., & Creswell, J. D. (2023). Research Design (6th ed.). SAGE Publications, Inc
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