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Culture, Institutions and the Wealth of Nations

Gorodnichenko, Yuriy - 2014

We construct an endogenous growth model that includes a cultural variable along the dimension of individualism-collectivism …. Collectivism leads to efficiency gains relative to individualism, but these gains are static, unlike the dynamic effect of … collectivism, in line with recent advances in biology and neuro-science. The effect of culture on long-run growth remains very …

Persistent link: https://www.econbiz.de/10013069257

The Response of Deferred Executive Compensation to Changes in Tax Rates

Gorry, Aspen - 2015

Given the increasing use of stock options in executive compensation, we examine how taxes influence the choice of compensation and document that income deferral is an important margin of adjustment in response to tax rate changes. To account for this option in the empirical analysis, we explore...

Persistent link: https://www.econbiz.de/10013015981

How Do Quasi-Random Option Grants Affect CEO Risk-Taking?

Shue, Kelly - 2019

We examine how an increase in stock option grants affects CEO risk-taking. The overall net effect of option grants is theoretically ambiguous for risk-averse CEOs. To overcome the endogeneity of option grants, we exploit institutional features of multi-year compensation plans, which generate two...

Persistent link: https://www.econbiz.de/10012902373

Growth Through Rigidity : An Explanation for the Rise in CEO Pay

Shue, Kelly - 2018

The dramatic rise in CEO compensation during the 1990s and early 2000s is a longstanding puzzle. In this paper, we show that much of the rise can be explained by a tendency of firms to grant the same number of options each year. Number-rigidity implies that the grant-date value of option awards...

Persistent link: https://www.econbiz.de/10012936509

Equity Vesting and Managerial Myopia

Edmans, Alex - 2014

This paper links the impending vesting of CEO equity to reductions in real investment. Existing studies measure the manager's short-term concerns using the sensitivity of his equity to the stock price. However, in myopia theories, the driver of short-termism is not the magnitude of incentives...

Persistent link: https://www.econbiz.de/10013063030

The Pay to Performance Incentives of Executive Stock Options

Hall, Brian J. - 2010

Detailed data about stock option contracts are used to measure and analyze the pay to performance incentives of executive stock options. Two main issues are addressed. The first is the pay to performance incentives created by the revaluation of stock option holdings. The findings suggest that if...

Persistent link: https://www.econbiz.de/10012763587

Some Unpleasant General Equilibrium Implications of Executive Incentive Compensation Contracts

Donaldson, John B. - 2009

We consider a simple variant of the standard real business cycle model in which shareholders hire a self-interested executive to manage the firm on their behalf. Delegation gives rise to a generic conflict of interest mediated by a convex (option-like) compensation contract which is able to...

Persistent link: https://www.econbiz.de/10013157919

Executive Compensation : A Survey of Theory and Evidence

Edmans, Alex - 2017

This paper reviews the theoretical and empirical literature on executive compensation. We start by presenting data on the level of CEO and other top executive pay over time and across firms, the changing composition of pay; and the strength of executive incentives. We compare pay in U.S. public...

Persistent link: https://www.econbiz.de/10012951861

Credit Default Swaps, Agency Problems, and Management Incentives

Lee, Jongsub - 2017

We show in a theoretical model that credit default swaps induce managerial agency problems through two channels: reducing the opportunity for managers to transfer value to equityholders from creditors via strategic default, and reducing the intensity of monitoring by creditors, which leads to...

Persistent link: https://www.econbiz.de/10012941985

Executive Compensation : A Modern Primer

Edmans, Alex - 2015

This article studies traditional and modern theories of executive compensation, bringing them together under a unifying framework. We analyze assignment models of the level of pay, and static and dynamic moral hazard models of incentives, and compare their predictions to empirical findings. We...

Persistent link: https://www.econbiz.de/10013023343

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