Chatty and Saez (2004) argued that more Principal-Agent models explaining firm dividend policy are expected and subsequently offered a model of dividend policy that includes a tax on dividends and agency problems (Chatty and Saez (2007)). In this paper we extent their model by adding a tax on...

This article explores a dynamic moral hazard setting in which a principal hires a team of agents for a project. As the project generates revenue upon completion, the principal incentivizes agents' efforts by designing bonuses for success. If bonuses are provided through spot or...

We investigate the optimal regulation of energy production reflecting the long-term goals of the Paris Climate Agreement.We analyze the optimal regulatory incentives to foster the development of non-emissive electricity generation when the demand for power is served either by a monopoly or by...

Following corporate governance endorsement of demographic diversity of ownership and control through Black economy empowerment programme in South Africa; this study analysis impacts of managerial ownership on firm performance and implementation of demographic diversity of ownership and control of...

This study shows that payout policy depends on the market expectation of the repurchase completion rate, within the context of the free cash flow hypothesis. Our model formulates that the amount of agency costs that are unlikely to be reduced discounts the share price at the announcement of...

Bonus banks are multi-year performance plans for deferring bonus payments and enhancing pay-for-performance by facilitating downward corrections of bonuses. This paper examines the incentive properties of bonus bank schemes based on performance measures as proposed in the literature. To attain...

In this study, we examine the three components of executive compensation including salary, equity, and bonus pay over a CEO’s tenure for US publicly-traded firms. We confirm a positive and significant relationship between two separate measures of firm performance and incentive pay. We also...

Uninformed investors (the principal) often delegate investments to institutions (the agent) with information advantages. However, conventional linear benchmarked contracts tend to cause excessive pegging to the benchmark and thus price distortion of stocks in the benchmark. This paper studies...

this study investigates the design of incentive compensation and agents’ behaviors in product innovation. We develop a dynamic control model in which product quality improvement depends on both instantaneous investment and manager’s innovative effort. Moreover, we consider the sensitivity of...

We ask why we observe multiple layers of decision-making in fund management with investors, sponsors, fund managers, and consultants, even if additional decision-makers are costly and do not contribute to superior performance. In our model, an investor hires a wealth manager (“sponsor”), who...