We develop the Probability Scaling Method, which rescales short-window announcement period returns; and the Intervention Method, which uses returns associated with intervening events, to estimate value improvements from tender offers. These methods address biases in conventional techniques,...

The model developed in this paper attempts to provide an explanation of the fact that Icelandic vessel owners and Icelandic skippers do not share costs of operation of a vessel. In the model a skipper is contracted to take a fishing vessel to the fishing ground. The skipper is remunerated with a...

Fishermen around the world are usually remunerated by shares. Iceland is no exception in that respect. The fixed wage systems,that have been tried out, have been short- lived and their utilization limited. The fundamental question asked in this paper is: Why do almost all vessel owners use the...

We aim at investigating to what extent reciprocal considerations, exhibited by employers and employees, should lead to stable gift exchange practices in the labor contract, giving rise to non- compensating wage differentials among industries. We use the concept of Sequential Reciprocity...

We examine the relationship between the optimal incentive contract and the firm’s decision to fire a manager for poor performance. We first derive some theoretical results using a simple principal-agent model, and then examine the empirical evidence on the incidence of forced turnover among...

Previous empirical analyses of the relationship between executive compensation and firm performance are often interpreted as suggesting that this relationship is weak. Although an absolute term like "weak" is ambiguous in this context, relative terms, such as "stronger," are meaningful. We argue...

The present paper proposes to employ a major shift in the legal and institutional environment to identify contractual incentives from the correlation of executive pay and firm performance. We use the reform of the German stock companies act in 1884 as such a major shift and estimate the...

Using an econometric procedure that corrects for both self-selection of individuals into their preferred compensation scheme and wage endogeneity, this study investigates whether significant differences exist in the job satisfaction of individuals receiving performance- related pay (PRP)...

Agency costs are a cost of production, and firms that do a better job of minimizing these costs should exhibit better performance. This paper tests this hypothesis by calculating the performance elasticity of average employee hourly compensation for U.S. manufacturing firms. This elasticity...

The problem of coordination failure, particularly in 'team production' situations, is central to a large number of mircroeconomic as well as macroeconomic models. As this type of inefficient coordination poses a severe economic problem, there is a need for institutions that foster efficient...