compensation. Under the optimal contracting approach to executive compensation, which has dominated academic research on the … power approach suggests that boards do not operate at arm’s length in devising executive compensation arrangements; rather … shareholder value. The authors show that the processes that produce compensation arrangements, and the various market forces and …

’ approach to executive compensation. Under this approach, the design of executive compensation is viewed not only as an … instrument for addressing the agency problem between managers and shareholders but also as part of the agency problem itself … managers. As a result, managers wield substantial influence over their own pay arrangements, and they have an interest in …

This paper presents a rational expectations model of optimal executive compensation in a setting where managers are in … a position to manipulate short-term stock prices, and managers' propensity to manipulate is uncertain. Stock … conditioning pay on long- versus short-term performance and characterize a second-best optimal compensation scheme. The paper shows …

This Paper develops an account of the role and significance of rent extraction in executive compensation. Under the … optimal contracting view of executive compensation, which has dominated academic research on the subject, pay arrangements are … have power to influence their own compensation, and they use their power to extract rents. As a result, executives are paid …

. The effect is stronger the greater the competition for managers and the stronger the managerial bargaining power. While …

We propose a model in which better governance incentivizes managers to perform better and thus saves on the cost of … providing pay for performance. However, when managerial talent is scarce, firms' competition to attract better managers reduces … an individual firm's incentives to invest in corporate governance. In equilibrium, better managers end up at firms with …

This paper examines how corporate governance and executive compensation affect bank capitalization strategies for an …

to be incompatible with the fact that the bulk of many high-profile managers' compensation is in the form of various …We reexamine the issue of executive compensation within a general equilibrium production context. Intertemporal … optimality places strong restrictions on the form of a representative manager's compensation contract, restrictions that appear …

managers have a preference for smooth time-paths of profits – as revealed by the empirical literature on ‘income smoothing … termination threats make collusion supportable at any discount factor, independent of contracts’ duration. When managers have …