we examine the potential unintended repercussions of the securities and exchange commission’s 2017 mandate requiring public companies to disclose the CEO pay ratio, specifically its effect on aggressive financial reporting. We propose that CEOs, in an effort to rationalize substantial pay, may engage in manipulative reporting practices. Employing a difference-in-differences design with a sample of 4,245 observations from 746 firms in the U.S. over 2014-2019, we uncover a correlation between higher pay ratios and increased income-inflating behavior post-disclosure. This behavior escalates under conditions of pronounced say-on-pay dissent and limited CEO labor market mobility. This research sheds light on the multifaceted consequences of pay ratio disclosure, thereby deepening our understanding of the policy’s impacts and broadening the application of equity theory to financial reporting.