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Pay for Short-Term Performance : Executive Compensation in Speculative Markets

Bolton, Patrick - 2006

We argue that the root cause behind the recent corporate scandals associated with CEO pay is the technology bubble of the latter half of the 1990s. Far from rejecting the optimal incentive contracting theory of executive compensation, the recent evidence on executive pay can be reconciled with...

Persistent link: https://www.econbiz.de/10012466561

Culture, Institutions and the Wealth of Nations

Gorodnichenko, Yuriy - 2010

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/10012462288

Executive Compensation and Short-termist Behavior in Speculative Markets

Bolton, Patrick - 2003

We present a multiperiod agency model of stock based executive compensation in a speculative stock market, where investors are overconfident and stock prices may deviate from underlying fundamentals and include a speculative option component. This component arises from the option to sell the...

Persistent link: https://www.econbiz.de/10012468976

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

Shue, Kelly - 2017

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/10012455590

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

Shue, Kelly - 2016

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/10012456699

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/10012457152

Equity Vesting and Managerial Myopia

Edmans, Alex - 2013

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/10012459254

Unethical Culture, Suspect CEOs and Corporate Misbehavior

Biggerstaff, Lee - 2013

We show that firms with CEOs who personally benefitted from options backdating were more likely to engage in other forms of corporate misbehavior, suggestive of an unethical corporate culture. These firms were more likely to overstate firm profitability and to engage in less profitable...

Persistent link: https://www.econbiz.de/10012459399

Managing Option Fragility

Hall, Brian J. - 2002

We analyze and explore option fragility, the notion that option incentives are fragile due to their non-linear payoff structure. Option incentives become weaker as options fall underwater, leading to pressures to reprice options or restore incentives through additional grants of equity-based...

Persistent link: https://www.econbiz.de/10012469654

The Pay to Performance Incentives of Executive Stock Options

Hall, Brian J. - 1998

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/10012472136

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