Benmelech, Efraim; Kandel, Eugene; Veronesi, Pietro - In: The Quarterly Journal of Economics 125 (2010) 4, pp. 1769-1820
The use of stock-based compensation as a solution to agency problems between shareholders and managers has increased dramatically since the early 1990s. We show that in a dynamic rational expectations model with asymmetric information, stock-based compensation not only induces managers to exert...