Pay for Short-Term Performance: Executive Compensation in Speculative Markets
Preprint
- 1 April 2005
- preprint
- Published by Elsevier in SSRN Electronic Journal
Abstract
We argue that the root cause behind the recent corporate scandals associated with CEO pay is the technology bubble of the latter half of the 1990s. Far from rejecting the optimal incentive contracting theory of executive compensation, the recent evidence on executive pay can be reconciled with classical agency theory once one expands the framework to allow for speculative stock markets.Keywords
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This publication has 2 references indexed in Scilit:
- Incentive Compensation When Executives Can Hedge the Market: Evidence of Relative Performance Evaluation in the Cross SectionThe Journal of Finance, 2003
- CEO compensation, diversification, and incentivesJournal of Financial Economics, 2002