Pay Ratio Disclosure Rule

There is an important relationship between government and markets, with the government playing an essential role in a market economy. The government has three general market functions: market creation, market protection, and market adjustment. The Pay Ratio Disclosure Rule is justified under both the market protection and the market adjustment functions of government, which are discussed in more detail below. Both of these functions help the SEC and federal securities laws achieve their mission and purpose of ensuring efficient and fair capital markets.

A. Efficient Capital Markets, the SEC, and Federal Securities Laws

Before defending the Pay Ratio Disclosure Rule under the government’s market protection and market adjustment functions,