The primary role of equity compensation is to provide incentives to an effort-averse agent. Here, we show that the chosen level of equity incentives, when publicly disclosed, will also convey information about future earnings, causing two-way linkages between incentive compensation and financial...

This paper studies how CEO pay and its composition is shaped by strategic factors related to the firm's capacity to generate rents and value, the uncertainty of its resource advantage, and the competitive interaction between firm stakeholders and top management. This is done using an analytical...

This paper investigates whether aligning manager and owner incentives can improve the innovation performance of firms. We find that pay-sensitivity works to align managerial actions to shareholder interests. As managerial wealth becomes more sensitive to the firm's stock price the innovation...

Academic and anecdotal evidence indicates that incentive systems often provide short-term payouts without regard for long-term consequences. New detailed disclosures mandated by FIN No. 48, Accounting for Uncertainty in Income Taxes, enable us to use a tax setting to investigate whether boards...

While the literature appeals to efficiency arguments from agency theory to explain the relative rise of CEO equity compensation, prior work has given less focus to CEO pay contracts based on equity and cash incentives that directly (analytically) maximize the total return of firm owners. The...

Wir analysieren das Gesetz zur Angemessenheit der Vorstandsvergütung. Ferner arbeiten wir einige aufgrund wirtschaftswissenschaftlicher Überlegungen zu erwartende Probleme heraus und prognostizieren mögliche ökonomische Auswirkungen des Gesetzes. Des Weiteren gehen wir im Rahmen einer...

This paper studies the impact of external reference values on managerial compensation contracts. We consider the effect of adoption of non-binding pay nfirms on actal remuneration behavior using a unique country example. We find that introduction of pay nfirms changed the reference values for...

This paper empirically investigates if corporate governance practices affect the resources firms devote to R&D. Two databases - one on governance ratings and the other on R&D intensity - are merged to obtain a multi-country, multi-sector sample of 279 European companies involved in R&D...

This paper investigates whether and how various characteristics of CEOs and corporate boards are related to the severity of corporate governance problems within firms. The latter is proxied by private benefits of control, which we measure for dual class stock firms using the voting premium...

This paper empirically investigates if corporate governance practices affect the resources firms devote to R&D. Two databases - one on governance ratings and the other on R&D intensity - are merged to obtain a multi-country, multi-sector sample of 279 European companies involved in R&D...