Executive Compensation And Short Termist Behavior In Speculative Markets
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Executive Compensation And Short Termist Behavior In Speculative Markets
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Author : Patrick Bolton
language : en
Publisher:
Release Date : 2003
Executive Compensation And Short Termist Behavior In Speculative Markets written by Patrick Bolton and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003 with Business planning categories.
We present a multiperiod agency model of stock based executive compensation in a speculative stock market, where investors are overconfident and stock prices may deviate from underlying fundamentals and include a speculative option component. This component arises from the option to sell the stock in the future to potentially overoptimistic investors. We show that optimal compensation contracts may emphasize short-term stock performance, at the expense of long run fundamental value, as an incentive to induce managers to pursue actions which increase the speculative component in the stock price. Our model provides a different perspective for the recent corporate crisis than the increasingly popular rent extraction view' of executive compensation
Executive Compensation And Short Termist Behavior In Speculative Markets
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Author : Patrick Bolton
language : en
Publisher:
Release Date : 2011
Executive Compensation And Short Termist Behavior In Speculative Markets written by Patrick Bolton and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
We present a multiperiod agency model of stock based executive compensation in a speculative stock market, where investors are overconfident and stock prices may deviate from underlying fundamentals and include a speculative option component. This component arises from the option to sell the stock in the future to potentially overoptimistic investors. We show that optimal compensation contracts may emphasize short-term stock performance, at the expense of long run fundamental value, as an incentive to induce managers to pursue actions which increase the speculative component in the stock price. Our model provides a different perspective on the recent corporate crisis than the `rent extraction view' of executive compensation.
Executive Compensation And Short Term Behavior In Speculative Markets
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Author : Patrick Bolton
language : en
Publisher:
Release Date : 2003
Executive Compensation And Short Term Behavior In Speculative Markets written by Patrick Bolton and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003 with categories.
Executive Compensation And Short Terminist Behavior In Speculative Markets
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Author : Patrick Bolton
language : en
Publisher:
Release Date : 2003
Executive Compensation And Short Terminist Behavior In Speculative Markets written by Patrick Bolton and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2003 with categories.
Pay For Short Term Performance
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Author : Patrick Bolton
language : en
Publisher:
Release Date : 2006
Pay For Short Term Performance written by Patrick Bolton and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with Executives categories.
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.
Pay For Short Term Performance
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Author : Patrick Bolton
language : en
Publisher:
Release Date : 2011
Pay For Short Term Performance written by Patrick Bolton and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2011 with categories.
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.
The Handbook Of The Economics Of Corporate Governance
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Author : Benjamin Hermalin
language : en
Publisher: Elsevier
Release Date : 2017-09-18
The Handbook Of The Economics Of Corporate Governance written by Benjamin Hermalin and has been published by Elsevier this book supported file pdf, txt, epub, kindle and other format this book has been release on 2017-09-18 with Business & Economics categories.
The Handbook of the Economics of Corporate Governance, Volume One, covers all issues important to economists. It is organized around fundamental principles, whereas multidisciplinary books on corporate governance often concentrate on specific topics. Specific topics include Relevant Theory and Methods, Organizational Economic Models as They Pertain to Governance, Managerial Career Concerns, Assessment & Monitoring, and Signal Jamming, The Institutions and Practice of Governance, The Law and Economics of Governance, Takeovers, Buyouts, and the Market for Control, Executive Compensation, Dominant Shareholders, and more. Providing excellent overviews and summaries of extant research, this book presents advanced students in graduate programs with details and perspectives that other books overlook. Concentrates on underlying principles that change little, even as the empirical literature moves on Helps readers see corporate governance systems as interrelated or even intertwined external (country-level) and internal (firm-level) forces Reviews the methodological tools of the field (theory and empirical), the most relevant models, and the field’s substantive findings, all of which help point the way forward
Break The Wall Street Rule
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Author : Michael Jacobs
language : en
Publisher: Addison Wesley Publishing Company
Release Date : 1993-04-20
Break The Wall Street Rule written by Michael Jacobs and has been published by Addison Wesley Publishing Company this book supported file pdf, txt, epub, kindle and other format this book has been release on 1993-04-20 with Business & Economics categories.
"Break the Wall Street Rule explains how you can maximize your stock-market returns by acting as a true owner of the companies whose stock you purchase. In his thorough analysis of today's investment landscape, former Treasury Department official Michael T. Jacobs shows that this "effective owner" approach takes the guesswork out of investing and reinvents the relationship between corporations and shareholders. In contrast, the current Wall Street Rule - to sell stock whenever its performance displeases you - actually undermines your returns." "Most investors speculate on stock prices, either buying and selling or paying mutual funds to buy and sell. Such shuffling produces dismal results compared to the overall market; each year three out of four money managers return less than the market average. The real beneficiaries of the Wall Street Rule are the investment industry and company executives who don't want to answer to owners. Jacobs shows that simply by investing for long-term growth, you can beat 95 percent of mutual funds. Even better, in the last decade companies with large effective-owner shareholders earned triple the market average." "With Break the Wall Street Rule investors of any size can become effective owners. In clear language Jacobs explains how small shareholders can utilize the power of institutional investors. There are guidelines for choosing companies structured for the benefit of their shareholders, not to insulate their executives from shareholders. Other chapters describe how to assemble a portfolio and how to calculate whether a stock has paid you back enough." "Many books explain when to buy stocks or which stocks to buy. Break the Wall Street Rule shows how real gains come from what you do once you own a stock. You can use the power of new SEC proxy rules to maximize your returns. You can ensure that management works for shareholders by supporting directors and resolutions that protect your interests, such as connecting pay to performance. Owning only $1000 of stock lets you propose your own shareholder resolutions; Jacobs illuminates the rules and realities of this process. As shown at Sears and GM, shareholders and boards can affect how major corporations are run. In sum, the effective owner philosophy of Break the Wall Street Rule will revolutionize the way you look at stock-market investing."--BOOK JACKET.Title Summary field provided by Blackwell North America, Inc. All Rights Reserved
Effects Of Executive Compensation Complexity On Investor Behavior In An Experimental Stock Market
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Author : Robert M. Gillenkirch
language : en
Publisher:
Release Date : 2013
Effects Of Executive Compensation Complexity On Investor Behavior In An Experimental Stock Market written by Robert M. Gillenkirch and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2013 with categories.
This study experimentally investigates whether shareholders correctly anticipate the incentive effects of increasingly complex compensation packages given to managers, and whether potential biases in individual shareholder beliefs carry over to price and volume effects in a stock market. In the experiment, a manager makes a decision about the stochastic dividend process generating the firm's fundamental value, and shareholders make estimations about fundamental value and trade shares in a stock market. The manager's action is either known or hidden and, nested in the hidden action condition, compensation is either simple or complex.We hypothesize that hidden action gives rise to perceived behavioral uncertainty, and that this uncertainty has valuation relevance in that it affects both individual estimations of fundamental firm value and stock prices. Furthermore, we hypothesize that perceived behavioral uncertainty increases with the complexity of compensation, and that compensation complexity also affects trading volume.We find supporting evidence for our conjectures. Both estimations and market prices are biased when the manager's action is hidden, and biases are stronger when compensation is complex. We further find that trading volume decreases when compensation is complex, even though the heterogeneity of investors' individual beliefs increases.
Executive Compensation And Investor Clientele
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Author : Laura Frieder
language : en
Publisher:
Release Date : 2006
Executive Compensation And Investor Clientele written by Laura Frieder and has been published by this book supported file pdf, txt, epub, kindle and other format this book has been release on 2006 with categories.
Executive compensation has increased dramatically in recent times, but so has trading volume and individual investor access to financial markets. We provide a model in which some managers obfuscate financial statements in order to extract additional compensation. Owing to a lack of sophistication or naivete, possibly arising from high opportunity costs of learning about accounting conventions and financial markets, small investors do not ascertain the extent of this behavior. Expected compensation is therefore higher when small investors form a more significant clientele in the market for a firm's stock. Our model further suggests that increased information asymmetry between large and small traders may deter the entry of small investors and keep executive compensation in check. Technologies that lower the cost of trading facilitate entry of small investors and raise expected compensation. Such compensation can in general be reduced through appropriate regulation and transparent disclosures. Empirical tests provide support to the key implication of the model that indirect executive compensation is higher in stocks with more retail investor participation.