This paper analyzes the optimal executive pay arrangement in a setting in which the CEO must be motivated to search for innovative investment ideas and, if he uncovers one, to implement the idea if and only if it is not excessively risky. I show that, depending on the value of the firm's...

This paper examines the role of the financial reporting environment in selecting a new CEO from within versus outside the organization. Weak reporting controls allow the CEO to misreport performance information, which reduces the board's ability to detect and replace poorly-performing CEOs as...

This paper analyzes the optimal equity pay mix in a setting in which executives face career concerns and must be motivated to search for innovative investment ideas and to make appropriate decisions regarding whether to pursue the uncovered idea. I show that, depending on the value of the firm's...

This paper examines the role of the financial reporting environment in selecting a new CEO from within versus outside the organization. We show that a CEO's ability to manipulate performance information renders it more difficult for the board to detect and replace poorly performing CEOs as well...