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Managerial Power and Rent Extraction in the Design of Executive Compensation

Bebchuk, Lucian Arye; Fried, Jesse; Walker, David I - C.E.P.R. Discussion Papers - 2002

subject, pay arrangements are set by a board of directors that aims to maximize shareholder value. In contrast, the managerial …

Persistent link: https://www.econbiz.de/10005114260

Executive Compensation as an Agency Problem

Bebchuk, Lucian Arye; Fried, Jesse - C.E.P.R. Discussion Papers - 2003

This Paper provides an overview of the main theoretical elements and empirical underpinnings of a ‘managerial power’ 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...

Persistent link: https://www.econbiz.de/10005662270

Optimal Defaults for Corporate Law Evolution

Bebchuk, Lucian Arye; Hamdani, Assaf - C.E.P.R. Discussion Papers - 2002

Public corporations live in a dynamic and ever-changing business environment. This Paper examines how courts and legislators should choose default arrangements in the corporate area to address new circumstances. We show that the interests of the shareholders of existing companies would not be...

Persistent link: https://www.econbiz.de/10005656367

Taking the Lord's Name in Vain: The Impact of Connected Directors on 19th century British Banks

Grossman, Richard; Imai, Masami - C.E.P.R. Discussion Papers - 2015

Parliament) and aristocratic titles (e.g., lords)--on the boards of directors of English and Welsh banks from 1879-1909 to … investigate whether the appointment of well-connected directors enhanced equity value for bank shareholders. Our analysis of panel … data shows that the appointment of connected directors did not increase the rate of return on bank equity. In fact, we find …

Persistent link: https://www.econbiz.de/10011145404

Ambiguity, Disagreement, and Allocation of Control in Firms

Dicks, David L.; Fulghieri, Paolo - C.E.P.R. Discussion Papers - 2015

We present a novel source of disagreement grounded in decision theory: ambiguity aversion. We show that ambiguity aversion generates endogenous disagreement between a firm's insider and outside shareholders, creating a new rationale for corporate governance systems. In our paper, optimal...

Persistent link: https://www.econbiz.de/10011213312

Delegated Activism and Disclosure

Dasgupta, Amil; Zachariadis, Konstantinos - C.E.P.R. Discussion Papers - 2011

Mutual funds are significant blockholders in many corporations. Concerns that funds vote in a pro-management manner to garner lucrative pensions contracts led the SEC to mandate the disclosure of proxy votes. We present a model of mutual fund voting in the presence of potential business ties. We...

Persistent link: https://www.econbiz.de/10009321841

Corporate Control and Executive Selection

Lippi, Francesco; Schivardi, Fabiano - C.E.P.R. Discussion Papers - 2010

We present a model in which the owner of the firm enjoys a private benefit from developing a personal relationship with the executives. This may lead the owner to retain a senior executive in office even though a more productive replacement is available. The model shows that the private returns...

Persistent link: https://www.econbiz.de/10008677237

Stock Market Returns, Corporate Governance and Capital Market Equilibrium

Parigi, Bruno; Pelizzon, Loriana; von Thadden, Ernst-Ludwig - C.E.P.R. Discussion Papers - 2015

This paper analyzes why corporate governance matters for stock returns if the stock market prices the underlying managerial agency problem correctly. Our theory assumes that strict corporate governance prevents managers from diverting cash flows, but reduces incentives for managerial effort. In...

Persistent link: https://www.econbiz.de/10011165663

The structure of CEO pay: pay-for-luck and stock-options

Chaigneau, Pierre; Sahuguet, Nicolas - C.E.P.R. Discussion Papers - 2012

We develop a stylized model of efficient contracting in which firms compete for CEOs. The optimal contracts are designed to retain and insure CEOs. The retention motive explains pay-for-luck in executive compensation, while the insurance feature explains asymmetric pay-for-luck. We show that the...

Persistent link: https://www.econbiz.de/10011084007

The Value of Control and the Costs of Illiquidity

Albuquerque, Rui; Schroth, Enrique - C.E.P.R. Discussion Papers - 2012

An inherent difficulty in valuing controlling blocks of shares is the illiquidity of the market. We explore the pricing implications associated with the illiquidity of controlling blocks of shares in the context of a search model of block trades. The model considers several dimensions of...

Persistent link: https://www.econbiz.de/10011084025

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