We propose a theory of optimal firm financing given nested information problems of adverse selection and agency cost …

the performance measure and its similarity (congruity, congruence) to the benefit of the manager’s employer. A necessary …

"Stock-based compensation is the standard solution to agency problems between shareholders and managers. In a dynamic … managers to work harder, it also induces them to hide any worsening of the firm's investment opportunities by following largely …-valued while managers hide the bad news to shareholders. We find that a firm-specific compensation package based on both stock and …