Mutual monitoring as a solution to moral hazard has been extensively studied by theorists. However, do shareholders actually take advantage of mutual monitoring among executives to design individual compensation? This paper non-parametrically identi…es and tests three structural models of principal-multiagent moral hazard using the data of S&P1500 …rms from 1993 to 2005. The Mutual Monitoring w...

This thesis examines firm performance through the dot-com bubble through the lens of executive compensation. Hypotheses based on the theoretical literature of Bolton, Scheinkman and Xiong (2006) as well as Bertrand and Mullainathan (2001) in regards to management compensation in a speculative bubble motivate three regression models with differing market-cap-growth based dependent variables and ...

This paper studies the effects of product market competition on the explicit compensation packages that firms offer to their CEOs, executives and workers. We use a large sample of both traded and non-traded UK firms and exploit a quasi-natural experiment associated to an increase in competition. The sudden appreciation of the pound in 1996 implied different changes in competition for sectors wi...

The paper examines the role of executive compensation in inducing management behavior that triggers private securities litigation. Incentive pay in the form of options is found to increase the probability of securities class action lawsuits, holding constant a wide range of other firm characteristics. In contrast, base pay levels and share ownership do not have a significant impact on lawsuit i...

CEO compensation has increased dramatically in the last few decades, drawing increasing scrutiny from policy-makers, researchers, and the broader public. We find that IT (information technology) intensity strongly predicts compensation of CEO and other top executives. Our examination of panel data from 2507 publicly traded firms over 15 years controls for other types of capital, number of emplo...

We examine how firms evaluate and compensate their chief financial officers (CFOs). CFOs participate in decision making much like other executives, but unlike most other executives they have fiduciary responsibilities for reporting firms’ financial results and safeguarding the integrity of financial reporting. Responsibility for financial reporting raises the question of whether it is appropria...

Classic financial agency theory recommends compensation through stock options rather than shares to induce risk neutrality in otherwise risk averse agents. In an experiment, we find that subjects acting as executives do also take risks that are excessive from the perspective of shareholders if compensated through options. Compensation through restricted company stock reduces the uptake of exces...

Detailed information on how …rms structure base salary, bonus payments and total compensation is drawn from a data set of more than 500 …rms between 1981-1988. This data is merged with personnel records of the …rms’ top executives to investigate the relationship between executive compensation and …rm pay policies. I …nd that the …rm pay policies have a strong e¤ect on compensation even when con...

I analyze the relationship between firm size and the extent to which executive compensation depends on the wealth of the firm’s shareholders. I use a simple agency model to motivate an econometric model of this relationship. Estimating this model on chief executive officer (CEO) compensation data using nonlinear least squares, I determine that pay–performance sensitivity (as defined by Jensen a...