Wesep, Edward D. Van; Wang, Sean - In: Journal of Corporate Finance 29 (2014) C, pp. 579-593
targets, in which case a compensation contract featuring severance pay can be optimal. While prior work has shown that … severance can induce managers to take positive NPV risks, we show that it can also keep them from taking negative NPV risks. We … show that severance should be contingent on results: complete failure should nullify any payments. We also show that …