In Defense of Incentive Compensation: Its Effect on Corporate Acquisition Policy
Financial economists have long recognized that compensation design, particularly the use of equity-based compensation, can provide strong motivation for corporate managers to make value-maximizing decisions. But the perception of excesses in equity-based pay for U.S. executives has become pervasive and has led many to question its efficacy. The fundamental problem is one of measurement-while it is relatively easy to measure the cost of equity-based compensation, it is difficult to determine the extent to which equitybased compensation actually causes managers to direct corporate resources into value-maximizing ventures. 2004 Morgan Stanley.
Year of publication: |
2004
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Authors: | Datta, Sudip ; Iskandar-Datta, Mai ; Raman, Kartik |
Published in: |
Journal of Applied Corporate Finance. - Morgan Stanley, ISSN 1078-1196. - Vol. 16.2004, 4, p. 82-88
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Publisher: |
Morgan Stanley |
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