Golden parachutes have attracted much debate and substantial attention from investors and public officials for more than two decades, and the Dodd-Frank Act mandated a shareholder vote on any future adoption of a golden parachute by public firms. We analyze the relationship that golden...

The regulation of executive compensation is like the phoenix of corporate debate. Every once in a while it rises from the ashes, dominates public debate with strong statements regarding efficiency, justice, and what managers "deserve" - and returns to rest until the next time populist sentiments...

Executive managers' remuneration has been an issue of debate for the last 30 years. Practitioners and academics are arguing for the mechanisms, mix, level, time horizon and goal. Disclosure or not of information regarding these issues preoccupies regulating, legislative authorities as well as...

Clawbacks are contractual provisions in executive compensation contracts that allow for an ex post recoupment of variable pay if certain triggering conditions are met. As a result of regulatory responses to financial crises and corporate scandals as well as of growing shareholder pressure to...

This paper is the first chapter of the third edition of The Anatomy of Corporate Law: A Comparative and Functional Approach, by Reinier Kraakman, John Armour, Paul Davies, Luca Enriques, Henry Hansmann, Gerard Hertig, Klaus Hopt, Hideki Kanda Mariana Pargendler, Georg Ringe, and Edward Rock...

I examine whether the Securities and Exchange Commission (SEC) in the US is a learning organization (i.e., one that is capable of learning and adaptation to the dynamic nature of the securities markets – the subject of the SEC's regulatory oversight). Using the treatment of public corporate...

Free Cash Flow (FCF) was adopted in the late 1980s as a financial tool to evaluate the firm and its individual projects. We question the procedure of calculating the FCF where a significant portion of Current Liabilities is offset against Current Assets, thereby creating the hybrid asset Net...

This paper examines the incentives from stock options for loss-averse employees subject to probability weighting. Employing the certainty equivalence principle, I built on insights from Cumulative Prospect Theory (CPT) to derive a continuous time model to value options from the perspective of a...

We develop a model wherein a risk-neutral but ambiguity-averse principal contracts with a risk-averse agent who has a risky project. Both the agent and the principal can observe the project output and a public signal. The correlation between the output and the public signal is private...