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Do CEOs Set Their Own Pay? The Ones Without Principals Do

Bertrand, Marianne - 2000

We empirically examine two competing views of CEO pay. In the contracting view, pay is used to solve an agency problem: the compensation committee optimally chooses pay contracts which give the CEO incentives to maximize shareholder wealth. In the skimming view, pay is the result of an agency...

Persistent link: https://www.econbiz.de/10012471166

Agency, Delayed Compensation, and the Structure of Executive Remuneration

Eaton, Jonathan - 1981

In this paper we examine the factors affecting the structure of executives' compensation packages. We focus particularly on the role of various types of delayed compensation as means of "bonding" executives to their firms. The basic problem is to design a compensation package that rewards...

Persistent link: https://www.econbiz.de/10012478336

A Calibratable Model of Optimal CEO Incentives in Market Equilibrium

Edmans, Alex - 2007

This paper presents a unified framework for understanding the determinants of both CEO incentives and total pay levels in competitive market equilibrium. It embeds a modified principal-agent problem into a talent assignment model to endogenize both elements of compensation. The model's closed...

Persistent link: https://www.econbiz.de/10012465278

Executive Compensation as an Agency Problem

Bebchuk, Lucian Arye - 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 managers...

Persistent link: https://www.econbiz.de/10012468885

Executive Compensation in America : Optimal Contracting or Extraction of Rents?

Bebchuk, Lucian Arye - 2001

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 set by a board of directors that aims to maximize...

Persistent link: https://www.econbiz.de/10012470054

The Limitations of Stock Market Efficiency : Price Informativeness and CEO Turnover

Gorton, Gary B. - 2009

Stock prices are more informative when the information has less social value. Speculators with limited resources making costly (private) information production decisions must decide to produce information about some firms and not others. We show that producing and trading on private information...

Persistent link: https://www.econbiz.de/10012463704

What's My Employee Worth? The Effects of Salary Benchmarking

Cullen, Zoë B.; Li, Shengwu; Perez-Truglia, Ricardo - National Bureau of Economic Research - 2022

report using this type of data to set salaries, a practice that is known as salary benchmarking. Despite their widespread use … across occupations, there is no evidence on the effects of salary benchmarking. We provide a model that explains why firms … are interested in salary benchmarking and makes predictions regarding the effects of the tool. Next, we measure the actual …

Persistent link: https://www.econbiz.de/10013435132

Uncovering the Hidden Effort Problem

Ben-Rephael, Azi; Carlin, Bruce Ian; Da, Zhi; … - National Bureau of Economic Research - 2021

We use machine learning to analyze minute-by-minute Bloomberg online status data and study how the effort provision of top executives in public corporations affects firm value. While executives likely spend most of their time doing other activities, Bloomberg usage data allows us to characterize...

Persistent link: https://www.econbiz.de/10012482657

Compensation Matters : Incentives for Multitasking in a Law Firm

Bartel, Ann - 2013

Due to the limited availability of firm-level compensation data, there is little empirical evidence on the impact of compensation plans on personal productivity. We study an international law firm that moves from high-powered individual incentives towards incentives for "leadership" activities...

Persistent link: https://www.econbiz.de/10012459249

Carrots that Look Like Sticks : Toward an Understanding of Multitasking Incentive Schemes

Al-Ubaydli, Omar - 2012

Constructing compensation schemes for effort in multi-dimensional tasks is complex, particularly when some dimensions are not easily observable. When incentive schemes contractually reward workers for easily observed measures, such as quantity produced, the standard model predicts that...

Persistent link: https://www.econbiz.de/10012460207

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