The extant literature has used measurements of CEO risk-taking incentives which do not include the effects of termination provisions such as severance agreements. This paper provides a general form model that allows for the valuation and computation of CEO compensation structures including...

I investigate whether restrictive loan covenants disrupt or improve firms' operating performance. Using an instrumental variables approach to address the endogenous relationship between covenant strictness and firms' efficiency, I find that stricter loan covenants lead to an increase in...

Employing a unique dataset with varying grant sizes and exercise prices, we test the competing optimal option incentive models of Hall and Murphy (2000, 2002) (HM) and Baker and Hall (2004) (BH) which differ with respect to the impact of CEO productivity on incentive determination and also the...

This paper quantifies a tenant-side "split incentives" problem that exists when the largest commercial sector customers are on electricity-included property lease contracts causing them to face a marginal electricity price of zero. We use exogenous variation in weather shocks to show that the...