Executive Compensation, Strategic Competition, and Relative Performance Evaluation

Executive Compensation, Strategic Competition, and Relative Performance Evaluation

Author: Raj Aggarwal

Publisher:

ISBN: UCSD:31822023659188

Category: Executives

Page: 74

View: 558

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We argue that strategic interactions between firms in an oligopoly can explain the puzzling lack of high-powered incentives in executive compensation contracts written by shareholders whose objective is to maximize the value of their shares. We derive the optimal compensation contracts for managers and demonstrate that the use of high-powered incentives will be limited by the need to soften product market competition. In particular, when managers can be compensated based on their own and their rivals' performance, we show that there will be an inverse relationship between the magnitude of high-powered incentives and the degree of competition in the industry. More competitive industries are characterized by weaker pay-performance incentives. Empirically, we find strong evidence of this inverse relationship in the compensation of executives in the United States. Our econometric results are not consistent with alternative theories of the effect of competition on executive compensation. We conclude that strategic considerations can preclude the use of high-powered incentives, in contrast to the predictions of the standard principal-agent model.

Advances in Quantitative Analysis of Finance and Accounting (New Series) Vol.16

Advances in Quantitative Analysis of Finance and Accounting (New Series) Vol.16

Author: Cheng F. Lee

Publisher: Center for PBBEFR & Ainosco Press

ISBN: 9789866286735

Category: Business & Economics

Page:

View: 457

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Advances in Quantitative Analysis of Finance and Accounting (New Series) is an annual publication designed to disseminate developments in the quantitative analysis of finance and accounting. The publication is a forum for statistical and quantitative analyses of issues in finance and accounting as well as applications of quantitative methods to problems in financial management, financial accounting, and business management. The objective is to promote interaction between academic research in finance and accounting and applied research in the financial community and the accounting profession.

Executive Compensation in Imperfect Financial Markets

Executive Compensation in Imperfect Financial Markets

Author: Jay Cullen

Publisher: Edward Elgar Publishing

ISBN: 9781782549291

Category: Law

Page: 264

View: 759

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This important book discusses the issue of executive compensation in Anglo-American financial markets following the financial crisis. The book begins by contextualizing the problem facing financial institutions in the US and the UK and argues that appr

Fairness of CEO Compensation

Fairness of CEO Compensation

Author: Mehtap Aldogan Eklund

Publisher: Springer Nature

ISBN: 9783030335540

Category: Business & Economics

Page: 200

View: 972

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Executive compensation and its fairness to stakeholders are topics of heated debate on platforms ranging from news forums to financial markets. This book stimulates critical thinking on executive compensation and guides academics and practitioners on the key concepts by developing a multi-faceted and multi-cultural framework. It also presents the new ‘Fair CEO Compensation,’ which uses a scientifically developed and structured stakeholder-based approach to reach optimal and fair CEO compensation, without capping bonuses or variable pay by rules and regulations. Financial, non-financial, organizational, strategic, cultural, personal, and social aspects are all taken into account in the framework. In addition to implementation guidelines and real-world examples, the book presents a checklist for businesses to measure the fairness of their CEO compensation based on the suggested framework. Moreover, the author also provides a survey template to help businesses investigate their employees’ perception of the fairness of their CEO’s compensation.

Pay Without Performance

Pay Without Performance

Author: Lucian A. Bebchuk

Publisher: Harvard University Press

ISBN: 0674020634

Category: Business & Economics

Page: 308

View: 603

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The company is under-performing, its share price is trailing, and the CEO gets...a multi-million-dollar raise. This story is familiar, for good reason: as this book clearly demonstrates, structural flaws in corporate governance have produced widespread distortions in executive pay. Pay without Performance presents a disconcerting portrait of managers' influence over their own pay--and of a governance system that must fundamentally change if firms are to be managed in the interest of shareholders. Lucian Bebchuk and Jesse Fried demonstrate that corporate boards have persistently failed to negotiate at arm's length with the executives they are meant to oversee. They give a richly detailed account of how pay practices--from option plans to retirement benefits--have decoupled compensation from performance and have camouflaged both the amount and performance-insensitivity of pay. Executives' unwonted influence over their compensation has hurt shareholders by increasing pay levels and, even more importantly, by leading to practices that dilute and distort managers' incentives. This book identifies basic problems with our current reliance on boards as guardians of shareholder interests. And the solution, the authors argue, is not merely to make these boards more independent of executives as recent reforms attempt to do. Rather, boards should also be made more dependent on shareholders by eliminating the arrangements that entrench directors and insulate them from their shareholders. A powerful critique of executive compensation and corporate governance, Pay without Performance points the way to restoring corporate integrity and improving corporate performance.

Global Corporate Governance

Global Corporate Governance

Author: Kose John

Publisher: Emerald Group Publishing

ISBN: 9781786351661

Category: Business & Economics

Page: 264

View: 297

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Advances in Financial Economics Vol 19 is peer reviewed and focusses on International Corporate Governance.

Funktionsfähigkeit und Stabilität von Finanzmärkten

Funktionsfähigkeit und Stabilität von Finanzmärkten

Author: Wolfgang Franz

Publisher: Mohr Siebeck

ISBN: 3161487761

Category: Business & Economics

Page: 304

View: 452

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English summary: This series, edited by the Ottobeuren Seminar on Economics, publishes those papers which are given at the seminars in Ottobeuren. The purpose of these seminars is to present new theoretical approaches as well as new empirical findings to a group of experts and to discuss the political-economic conclusions with them. This volume contains the papers and supplementary papers given at the 34th Seminar on Economics on the subject of 'financial crises' from September 12 - 15, 2004. The objective of the seminar was to discuss current issues involving financial markets and the economy in the fields of corporate governance, banks and stock markets as well as the causes and the consequences of international financial crises. German description: Das Wirtschaftswissenschaftliche Seminar Ottobeuren ist eine traditionsreiche Institution fur wirtschaftswissenschaftliche Forschung. In jedem Jahr trifft sich ein kleiner Kreis ausgewiesener Experten eines speziellen Forschungsgebietes zu einem Symposium in Ottobeuren. In diesem Tagungsband werden die Referate und Korreferate des 34. Wirtschaftswissenschaftlichen Seminars vom 12. - 15. September 2004 zum Thema 'Finanzkrisen' veroffentlicht. Ziel des Seminars war es, aktuelle finanzmarktokonomische Fragen in den Bereichen Corporate Governance, Banken und Borsen sowie Ursachen und Folgen internationaler Finanzkrisen zu diskutieren.

Handbook of Game Theory and Industrial Organization, Volume II

Handbook of Game Theory and Industrial Organization, Volume II

Author: Luis C. Corchón

Publisher: Edward Elgar Publishing

ISBN: 9781788112789

Category:

Page: 552

View: 741

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This second volume of the Handbook includes original contribution by experts in the field. It provides up-to-date surveys of the most relevant applications of game theory to industrial organization. The book covers both classical as well as new IO topics such as mergers in markets with homogeneous and differentiated goods, leniency and coordinated effects in cartels and mergers, static and dynamic contests, consumer search and product safety, strategic delegation, platforms and network effects, auctions, environmental and resource economics, intellectual property, healthcare, corruption, experimental industrial organization and empirical models of R&D.

Strategic Competition in Oligopolies with Fluctuating Demand

Strategic Competition in Oligopolies with Fluctuating Demand

Author: Leslie Neubecker

Publisher: Springer Science & Business Media

ISBN: 9783540295570

Category: Business & Economics

Page: 235

View: 302

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Dynamic oligopolistic competition has implications both for the strategic management of firms and for the design of an effective competition policy. Consequently, the present book considers the issue from a private and social perspective. It discusses the potential pro- and anticollusive effects of long-term business strategies, especially for cooperation and reinvestment in production, financing and management compensation, in markets with fluctuating demand. The method of supergame theory is applied to integrate long-run decisions and different types of demand into the analysis. Aside from its contributions to the theoretical literature, the book provides valuable insights into the design of competition policy. The observed development of prices is an indicator of the extent of collusion in the market and can thereby be used to assess antitrust regulation in certain business areas, and to focus the resources of competition authorities on markets where conditions are conducive to collusion.