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The principal-agent model of executive compensation is of central importance to the modern theory of the firm and …
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We investigate an alternative economic channel of a positive relationship between risk and compensation, as documented by Cheng, Hong, and Scheinkman (2015). We propose that when information asymmetry exists, firms generally seek to use compensation as a signal of their CEOs' ability. The risks...
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The principal-agent model of executive compensation is of central importance to the modern theory of the firm and …
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