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Optimal Contracting with Unobservable Managerial Hedging

Huang, Yu - 2017

We develop a continuous-time model where a risk-neutral principal contracts with a CARA manager protected by limited liability to run a project. Its output can be increased by costly unobservable managerial effort, but it is liquidated if the manager quits. The manager can trade a market...

Persistent link: https://www.econbiz.de/10012942310

CEO Contractual Protection and Debt Contracting

Chen, Xia; Cheng, Qiang; Lo, Alvis K.; Wang, Xin - 2022

CEO contractual protection, in forms of CEO employment agreements and CEO severance pay agreements, is prevalent among S&P 1500 firms. While prior research has examined the impact of these agreements on corporate decisions from shareholders’ perspective, there is little research on the impact...

Persistent link: https://www.econbiz.de/10014235938

Equilibrium CEO contract with belief heterogeneity

Bianchi, Milo; Dana, Rose-Anne; Jouini, Elyès - 2021

Persistent link: https://www.econbiz.de/10012643268

Equilibrium CEO contract with belief heterogeneity

Bianchi, Milo; Dana, Rose-Anne; Jouini, Elyès - In: Economic theory 74 (2022) 2, pp. 505-546

Persistent link: https://www.econbiz.de/10013442065

CEO Contract Design Regulation and Risk-Taking

Sauset, Johannes - 2015

Since 2009, the European Commission requires firms to incorporate an array of new elements into CEO compensation contracts, such as bonus caps, claw back provisions, bonus deferral, performance-vesting, and minimum shareholding guidelines. This paper examines whether CEO contract design in line...

Persistent link: https://www.econbiz.de/10013012322

Are Ex-Ante CEO Severance Pay Contracts Consistent with Efficient Contracting?

Cadman, Brian D.; Campbell, John L.; Klasa, Sandy - 2016

Efficient contracting predicts that ex-ante severance pay contracts are offered to CEOs as protection against downside risk and to encourage investment in risky positive net-present-value projects. Consistent with this prediction, we find that ex-ante contracted severance pay is positively...

Persistent link: https://www.econbiz.de/10014185462

CEO Tournament Incentives and Corporate Debt Contracting

Ghosh, Chinmoy; Huang, Di; Nguyen, Nam; Phan, Hieu V. - 2022

This study examines the relation between CEO tournament incentives, proxied by the difference between CEO pay and the median pay of the senior executives of a given firm, and corporate debt contracting. We find negative relations between CEO pay gap and the cost of debt and default risk, and a...

Persistent link: https://www.econbiz.de/10014235416

Labor Market Immobility and Incentive Contract Design

Lin, Chen - 2020

Research suggests that restricted labor mobility discourages managers from investing in human capital and reduces firm … value. However, whether firms re-incentivize managers to mitigate its adverse effects remains unexplored. We find that after … the adoption of the inevitable disclosure doctrine (an exogenous negative shock to managers' mobility), firms convexify …

Persistent link: https://www.econbiz.de/10012850825

Optimal Contracts for Risk Managers

Jung, Jin Yong - 2018

This study analyzed the principal-agent problem, in which the agent performs risk management tasks, and considered the cost minimization problem of the principal, the objective of which is to design the cheapest contract inducing a target effort. Our results confirm that a one-step bonus...

Persistent link: https://www.econbiz.de/10012926192

Incentives and Restrictions in Venture Capital Contracts

Anita, Lovas - 2016

In venture capital markets, contracts between investors and enterprises stipulate special incentives and restrictions in order to address the occurrence of severe asymmetric information, to reduce investor risk, and to facilitate successful exits. The purpose of this paper is to provide an...

Persistent link: https://www.econbiz.de/10012995899