We examine the relation between managerial incentives and disclosure. Specifically, we examine how contracts that explicitly evaluate managers relative to peer performance are associated with: (1) the transparency of mandatory disclosure; (2) the provision of voluntary disclosure; and (3) the...

Overeducated workers are more productive and have higher wages in comparison to their adequately educated coworkers in the same jobs. However, they face a series of challenges in the labor market, including lower wages in comparison to their similarly educated peers who are in correctly matched...

This paper investigates the welfare impact of reemployment bonuses in a dynamic job search model. Reemployment bonuses, monetary incentives offered to workers who obtain employment, may mitigate the moral hazard in unemployment insurance (UI) while preserving consumption smoothing. Using a...

In this experimental study, we compare the effects of a compensation scheme based on Relative Performance Evaluation (RPE) and a compensation scheme based on Absolute Performance Evaluation (APE) on decision-making in a market game. To this end, we conduct an online experiment using the strategy...

In many countries wages are set by collective agreements. Such agreements tend to impose wage equality among the a⁄ected workers. We use a moral-hazard environment with two inferiority-averse workers who di⁄er in their productivities but are otherwise identical. In this setting, we analyze...

Based on the recent SEC-mandated disclosures of CEO-worker pay ratios, we find that firms significantly decrease (increase) their CEO-worker pay ratios when their prior pay ratios are high (low) relative to peers. More importantly, the decrease in pay ratio among high pay ratio firms is...

Digital transformation (DT) is an ongoing and costly process that requires careful planning and the motivation of top executives (CEOs). This research analyzes the CEOs compensation as a motivation to embrace DT by reducing agency issue. We determine the extent of DT through a textual analysis...

In this paper, I use a unique law that sets a binding upper limit on financial firms' executive compensation in Israel and study its spillover effects on executive compensation in the non-restricted firms. The results indicate that the legislation created an anchoring effect at the threshold...

Compensation schemes have been blamed for encouraging excess risk-taking on the part of managers within the financial system and real economy. In general, compensation cannot decrease below the base salary, while gains from bonuses can be limitless. The potential link between compensation and...

The current paper studies a multiple agent setting with career concerns and pay for performance contracts. In the two-period model, an Investor finances and offers a share of the profits to the Venture Capitalist. The Venture Capitalist, who faces career concerns, decides on the risk type of the...