Evidence on How Systematic Differences between ExecuComp and non-ExecuComp Firms Can Affect Empirical Research Results

We provide empirical evidence on the implications of using the ExecuComp database to investigate empirical corporate governance and compensation issues by: a) documenting systematic differences in compensation and governance structures between ExecuComp and non-ExecuComp firms; b) providing examples where inferences drawn from tests conducted on ExecuComp samples do not generalize to broader samples; and c) demonstrating that expanding the sample to include non-ExecuComp firms increases the heterogeneity of the sample thereby allowing researchers to uncover previously hidden conditional or nonlinear relations. Overall, our findings indicate that there are important differences in the characteristics of ExecuComp and non-ExecuComp samples beyond firm size. Our study enhances the ability of researchers to draw valid inferences from empirical tests using ExecuComp data and suggests that expanding samples to include non-ExecuComp firms can generate a richer understanding of the underlying economic phenomena of interest.