This paper proposes to exploit a reform in legal rules of corporate governance to identify contractual incentives from the correlation of executive pay and firm performance. In particular, we refer to a major shift in the legal and institutional environment, the reform of the German joint-stock...

In the aftermath of the Mannesmann case the German corporate law of executive compensation has been increasingly relying on incentive-based payments until the recent financial crisis. By including benchmarks for reasonable compensation in § 87 para. 1 of the Stock Corporation Act (AktG) as...

The literature posits that some CEO overconfidence benefits shareholders, though high levels may not. We argue adequate controls and independent viewpoints provided by an independent board mitigates the costs of CEO overconfidence. We use the concurrent passage of the Sarbanes-Oxley Act and...