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Merit Pay and Pain : Linking Congressional Pay to Performance
McPike, Jonathan David - 2011
Despite the Founding Fathers' careful planning, the reason for the public's lack of confidence in Congress is that elections, like the institutional checks and balances of federalism and separation of powers, are necessary but not sufficient to ensure that Congress acts in the best interests of...
Persistent link: https://www.econbiz.de/10013132927
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Dynamic contracting with long-term consequences : optimal CEO compensation and turnover
Vasama, Suvi - 2016
serially correlated over time. The model captures a learning-by-doing feature: higher effort by the manager increases the … quality of the match between the firm and the manager in the future. The optimal incentive scheme entails an inefficiently … turnover policy reaches efficiency; the manager is never retained if it is inefficient to do so. The manager’s compensation …
Persistent link: https://www.econbiz.de/10011550469
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Stock-based compensation plans and employee incentives
Zábojník, Ján - 2014
Standard principal-agent theory predicts that large firms should not use employee stock options and other stock-based compensation to provide incentives to non-executive employees. Yet, business practitioners appear to believe that stock-based compensation improves incentives, and mounting...
Persistent link: https://www.econbiz.de/10010362951
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Managerial Compensation and Outcome Volatility
Chen, Xiaoyan - 2018
We present a simple discrete-time version of the continuous-time agency model under mean-volatility joint ambiguity uncertainties, which conveniently captures a number of important properties of optimal contracts without having to rely on complex continuous-time mathematical issues. The...
Persistent link: https://www.econbiz.de/10012924934
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CEO Overconfidence, CEO Compensation, and Earnings Manipulation
Yu, Chia-Feng (Jeffrey) - 2015
In the wake of recent financial crises and corporate failures, chief executive officers (CEOs) are often blamed for their overconfidence leading to earnings manipulation and excessive risks. Why is it then that these overconfident CEOs obtain job offers in the first place? This paper presents a...
Persistent link: https://www.econbiz.de/10013036600
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Market-Based Compensation, Price Informativeness and Short-Term Trading
Calcagno, Riccardo - 2007
This paper shows that there is a natural trade-off when designing market-based executive compensation. The benefit of market-based pay is that the stock price aggregates speculators' dispersed information and therefore takes a picture of managerial performance before the long-term value of a...
Persistent link: https://www.econbiz.de/10012777574
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The Value of Luck in the Labor Market for CEOs
Amore, Mario Daniele - 2020
It is well-known that luck increases the compensation of CEOs at their current firm. In this paper, we explore how luck affects CEOs' outside options in the labor market, and the performance of firms that hire lucky CEOs. Our results show that luck at their current firm makes CEOs move to a new...
Persistent link: https://www.econbiz.de/10012832672
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Call-Option Compensation and the Manager's Intertemporal Risk-Taking Behavior
Romaniuk, Katarzyna - 2012
This paper derives continuous-time conditions for a manager compensated with a call option to increase risk-taking. We …
Persistent link: https://www.econbiz.de/10013099580
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Equilibrium Executive Compensation
Chemla, Gilles; Rivera, Alejandro; Shi, Liyan - 2021
We examine a general equilibrium dynamic economy in which each firm i) hires a manager who can divert cash flows and ii …) can fire him after poor performance, generating costs to both parties.The contract is terminated when the manager … decrease with the firm's discount rate and the manager's termination cost and increase with the manager's discount rate, the …
Persistent link: https://www.econbiz.de/10013223925
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A Theory of Fair CEO Pay
Chaigneau, Pierre; Edmans, Alex; Gottlieb, Daniel - 2022
This paper studies optimal executive pay when the CEO is concerned about fairness: if his wage falls below a perceived fair share of output, the CEO suffers disutility that is increasing in the discrepancy. Fairness concerns do not lead to fair wages always being paid -- to induce effort, the...
Persistent link: https://www.econbiz.de/10014235868