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How important are risk-taking incentives in executive compensation?
Dittmann, Ingolf; Yu, Ko-Chia - 2009
This paper investigates whether observed executive compensation contracts are designed to provide risk-taking incentives in addition to effort incentives. We develop a stylized principal-agent model that captures the interdependence between firm risk and managerial incentives. We calibrate the...
Persistent link: https://www.econbiz.de/10011378949
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Managerial payoff and gift exchange in the field
Englmaier, Florian; Leider, Stephen G. - 2012
We conduct a field experiment where we vary both the presence of a gift exchange wage and the effect of the worker's effort on the manager's payoff. The results indicate a strong complementarity between the initial wage gift and the agent's ability to "repay the gift". We collect information on...
Persistent link: https://www.econbiz.de/10009488990
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Market competition and executive pay : increased competition affects the pay incentives firms provide to their managers and may also affect overall pay structures
Ferreira, Priscila - 2015
pay and performance. To the extent that product-market competition can affect the incentive schemes offered by firms to …
Persistent link: https://www.econbiz.de/10011427661
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Ironing Out the Kinks in Executive Compensation : Linking Incentive Pay to Average Stock Prices
Tian, Yisong S. - 2012
Traditional stock option grant is the most common form of incentive pay in executive compensation. Applying a principal …-agent analysis, we find this common practice suboptimal and firms are better off linking incentive pay to average stock prices. Among … other benefits, averaging reduces volatility by about 42%, making the incentive pay more attractive to risk …
Persistent link: https://www.econbiz.de/10013100690
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Real Earnings Smoothing and Managerial Compensation Incentives
Chen, Changling - 2019
' incentive of increasing R&D investment of high risk in nature) and the sensitivity of executive wealth to a unit change in stock … price (delta, capturing executives' incentive of preserving stock price possibly through reducing R&D investment). Given the … risk-taking incentive of executives, and find evidence supporting our hypothesis that the real smoothing is less for firms …
Persistent link: https://www.econbiz.de/10012894937
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Payday Before Mayday : CEO Compensation Contracting for Distressed Firms
Carter, Mary Ellen - 2020
Using a sample of more than 1,500 US public firms in the period 1998-2016, we examine how firms endogenously adjust CEO compensation contracts when they become financially distressed. The link between compensation and equity-based measures of firm performance is positive and strong prior to...
Persistent link: https://www.econbiz.de/10012851901
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CEO compensation : evidence from the field
Edmans, Alex; Gosling, Tom; Jenter, Dirk - 2021
and incentive compatibility. These constraints lead to lower pay levels and more one-size-fits-all structures … view intrinsic motivation and reputation as stronger motivators than incentive pay. They believe pay matters to CEOs not to …
Persistent link: https://www.econbiz.de/10012584217
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CEO pay at valeant : does extreme compensation create extreme risk?
Larcker, David F.; Tayan, Brian - 2016
The litmus test for an effective compensation program is whether it provides “pay for performance.” While the concept of pay for performance is simple, its implementation is not. In particular, boards must consider not only whether a compensation plan encourages executives to pursue...
Persistent link: https://www.econbiz.de/10011864729
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An activist view of CEO compensation
Baum, Alex; Hale, Robert; Morfit, Mason; Larcker, David F. - 2017
Understanding CEO compensation plans is a continuing challenge for directors and investors. The disclosure of these plans is dictated by SEC rules that rely heavily on the “fair value” of awards at the time they are granted. The problem with these numbers is that they are static and do not...
Persistent link: https://www.econbiz.de/10011870307
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Incentive Alignment through Performance-Focused Shareholder Proposals on Management Compensation
Fortin, Steve - 2014
We investigate an emerging pay-performance activism under a natural setting of performance-focused shareholder proposals rule (PSPs) (Rule 14a-8) established by the Securities and Exchange Commission (SEC) for top management compensation. We find that: (1) PSP sponsors successfully identify...
Persistent link: https://www.econbiz.de/10013066953