In a series of 5 experiments, we investigated whether the processing of phonologically assimilated utterances is influenced by language learning. Previous experiments had shown that phonological assimilations, such as /lean#bacon/ → [leam bacon], are compensated for in perception. In this article, we investigated whether compensation for assimilation can occur without experience with an assimil...

Intangible assets are a key contributor to firm value, enabling the firm to differentiate itself from competitors on the basis of its access to specialized, efficient, firm-specific information, activities and procedures, identified as organization capital (OC). Since OC contains a heterogeneous group of disparate items, we isolate firm value creation by decomposing OC into two major parts: (1)...

The 1940s were a decade of sharp contraction in wage inequality, particularly at the top of the distribution. We study this narrowing using a new dataset on the compensation of top executives. Relative to average earnings, median executive pay declined 0.34 log points from 1940 to 1949. We find that government regulation—including explicit salary restrictions and taxation—had, at best, a modest...

This thesis consists of three essays and studies CEO compensation and mergers and acquisitions in empirical corporate finance. The first essay is sole-authored and is titled ‘The Effect of Social Interactions on Executive Compensation.’ The second essay ‘The Role of Investment Banker Directors in M&A: Can Experts Help?’ is a joint work with Qianqian Huang, Erik Lie, and Ke Yang. The third essay...

Compensation schemes often reward success but do not penalize failure. Fixed salaries with stock options or bonuses have this feature. Yet the standard principal–agent model implies that pay is normally monotonically increasing in performance. This paper shows that, under loss aversion, there will be intervals over which pay is insensitive to performance, with the use of carrots but not sticks ...

We present a unified approach to solving contracting problems with full information in models driven by Brownian motion. We apply the stochastic maximum principle to give necessary and sufficient conditions for contracts that implement the so-called first-best solution. The optimal contract is proportional to the difference between the underlying process controlled by the agent and a stochastic...

In this paper we present a unified approach to solving principal-agent problems with full information in models driven by Brownian Motion. We apply the stochastic maximum principle to give necessary and sufficient conditions for contracts that implement the so-called first-best solution. The optimal contract is proportional to the difference between the underlying process controlled by the agen...

In this paper we present a unified approach to solving principal-agent problems in models driven by Brownian Motion. We apply the stochastic maximum principle to give necessary and sufficient conditions for optimal contracts, for both the symmetric information case and the hidden information case. We also make a distinction between the case of the utility from the payoff being separable or not ...

This paper examines the effect that the ‘Cadbury reforms’ have had on the pay determination process of executives in the UK Our results suggest that, on average, the impact has been disappointing. The relationship between pay and performance remains weak and the link to firm size has, if anything, been strengthened. However, our results suggest considerable heterogeneity in the impact of the re...

This research intends to explore the factor determining the positive relation between executive stock options and managerial risk taking. I firstly investigate the relation between the risk increase of investment project (referred to the risk relative) and a measure of incentive effects of stock options (referred to as the incentive ratio). The evidence shows a positive relation between the ris...