This paper examines how executives’ compensation structure interacts with firm debt structure, and focuses on how executives’ compensation structure affects firm financing choice between secured debt and unsecured debt. Based on the compensation contracts, executives make corresponding investment and financing decisions for their firms. Therefore, different compensation structures may lead to d...

Compensation of executives by means of equity has long been seen as a means to tie executives' income to company performance, and thus as a solution to the principal-agent dilemma created by the separation of ownership and management in publicly owned companies. The overwhelming part of such equity compensation is currently provided in the form of stock-options. Recent events have however reviv...

Stock option grants have become an increasingly popular component of executive compensation as firms seek to align the interests of executives and shareholders. For example, in 1999, 47% of the total compensation of S&P 500 executives was accounted for by stock options, up 22% from 1992 (Hall & Murphy, 2002). In contrast to their increased popularity, the value of executives’ stock option portf...

This study examines how the risk-taking incentive of top executives drives the strategic risk-taking in corporate IT implementation. We use the risk incentive provided in executive compensation to capture top executives’ risk-taking incentive, and develop measures of aggressive IT implementation to capture strategic risk-taking in IT implementation. Our analysis provides empirical evidence that...

We derive conditions under which limits on executive compensation can enhance efficiency and benefit shareholders (but not executives). Having its hands tied in the future allows a board of directors to credibly enter into relational contracts with executives that are more efficient than performance-contingent contracts. This has implications for the ideal composition of the board. The analysis...

We derive conditions under which state-imposed limits on executive compensation can enhance efficiency and benefit shareholders (but not executives). Having their hands tied in the future allows a board of directors to credibly enter into relational contracts with executives that are more efficient than performance-based contracts. This in turn can have implications for firm strategy and the id...

The arrival of spring means yet another round in the national debate over executive compensation. But the critics have it wrong. The relentless attention on how much CEOs are paid diverts public attention from the real problem-how CEOs are paid. The authors present an in-depth statistical analysis of executive compensation. The study incorporates data on thousands of CEOs spanning five decades....

firms invest in their learning activities to improve their innovative efforts. these kinds of activities are either internal or external. knowledge which flows among local actors is one of the external learning factors. spontaneous knowledge flows among firms without any compensation or with compensation less than the real value is called knowledge spillover. this paper analyzes the effect of k...

Literature suggests investors react to the presence, presentation and prominence of non-GAAP earnings disclosures. We extend this literature by considering purpose disclosures their effect on investors' judgements decisions. find when are used determine executive compensation, assign a higher evaluation financial performance invest more capital. Consistent with attribution theory, our mediation...

We develop a general equilibrium model that delivers realistic fluctuations in both the level as well as the dispersion in executive pay as a result of changes in the technology frontier. Our model recognizes that executives add value to the firm not only by participating in production decisions, but also by identifying new investment opportunities. The economic value of these two distinct comp...