The unanimous voting rule is often viewed as analogous to voluntary market exchange. This paper demonstrates that when third-party pecuniary effects exist, this analogy breaks down because unlike markets, unanimous voting requires compensation for these effects. Thus, efficient market outcomes typically will be rejected by the unanimous voting rule. Even when transactions costs are low enough t...

This paper studies the e¤ect of changes in foreign competition on the structure of compensation and incentives of U.S. executives. We measure foreign competition as import penetration, and use tari¤s and exchange rates as instrumental variables to estimate its causal e¤ect on pay. We …nd that higher foreign competition leads to more incentive provision in a variety of ways. First, it increases ...

Recent research and public discourse on executive compensation and corporate governance suggests a growing consensus that firms can and should increase their control over top managers by increasing the use of managerial incentives and monitoring by boards of directors. This study departs from this consensus by offering an alternative perspective that considers not only the benefits, but also th...

The NHS Plan welcomes the use of team rewards but does not specify how team based incentives are to be implemented or make clear what types of teams such incentives are to be given to. This paper looks for insights from economic theory on how to define teams and optimal incentive schemes within them. We give a brief description of the incentive mechanisms suggested in the NHS Plan and discuss t...

This paper provides a theory of informal communication (cheap talk) between firms and the capital market. The theory emphasizes the central role that agency conflicts play in firms’ disclosure policies. Since managers’ information is a consequence of their actions, incentive compensation and information disclosure become two intrinsically linked aspects of corporate governance. In the model, th...

The paper by Lynch et al. (2021) argues that payments to research participants in biomedical can be divided into three different categories, reimbursement, compensation, and incentive ...

state compensation to crime victims means paying money by the governmental institutions to victims or his/her families, when restitution by the offender and other financial sources is accessible. in the legal system of england, law of criminal damages includes all aspects of state compensation such as: conditions of eligibility related to victims, crimes, damages, perpetrators as well as proced...

This paper investigates the effect of the Sarbanes-Oxley Act (hereafter, SOX) on the compensation structure and the risk-taking incentives of CEOs as revealed by their research and development expenses and capital expenditures. We hypothesize that firms will respond to the additional liability imposed by SOX on corporate executives by altering the mix of incentive compensation to fixed salary a...

We consider the portfolio delegation problem in a world with potentially incomplete contingent claim markets. A principal hires an agent to manage a portfolio. When the agent has limited liability (that is, there is a lower bound on the compensation contract), she may have an incentive to take on excessive risk. With complete markets, the precise nature of the risk the agent may take on is a la...

We examine the role of information-based stock trading in affecting the risk-incentive relation. By incorporating an endogenous informed trading into an optimal incentive contracting model, we analytically show that, apart from reducing incentives, a greater risk increases the level of information-based trading which consequently enhances executive incentives and offsets the negative risk-incen...