We study optimal compensation contracts that (i) are designed to address a joint moral hazard and adverse selection problem and that (ii) are based on performance measures which may be manipulated by the agent at a cost. In the model, a manager is privately informed about his productivity prior...

We study a dynamic model of earnings quality and earnings management in which firms take into account long- and short-term considerations when reporting earnings. In addition to providing predictions about the time series properties of earnings quality and reporting bias, the model offers a...

type="main" <title type="main">ABSTRACT</title> <p>We study optimal compensation contracts that (1) are designed to address a joint moral hazard and adverse selection problem and that (2) are based on performance measures, which may be manipulated by the agent at a cost. In the model, a manager is privately informed about...</p>

This paper studies dynamic disclosure when the firm value evolves stochastically over time. The presence of litigation risk, arising from the failure to disclose unfavorable information, not only prompts bad news disclosures but also crowds out good news disclosures. The manager's disclosure...

We study how competition for talent affects CEO compensation, taking into consideration that CEO decisions and CEO skills or talent are not observable, and CEOs can manipulate performance as measured by outsiders. Firms compete by offering contracts that generate rents for the CEO. We derive the...