This paper employs a life-cycle model of consumption and saving to study risk premia in CEO compensation, and compares them to variation in observed pay levels. The model incorporates the main types of risk to income and savings that executives of public corporations typically face: option- and...

This study uses the firm life cycle framework to extend our understanding of firm contracting practices. First, based on the theory of firm characteristics and the nature of firm transactions in each life cycle stage, we document significant differences in both the level and mix of executive...