Given CEOs' substantial equity portfolios, much recent literature on CEO incentives regards cash-based bonus plans as largely irrelevant, begging the question of why nearly all CEO compensation plans include such bonuses. We develop a new measure of bonus plan incentives, and document that...

We examine how constraints on directors' availability to serve on boards influence their labor market outcomes. We find that directors who lose (or leave) a board are more likely to subsequently gain a new board seat, regardless of their performance on the departed board, suggesting that...

I examine the relation between shareholder value and managerial risk-taking and how this value-risk tradeoff influences managers' incentive compensation packages. I find that shareholder value increases with risk and therefore managerial risk aversion creates potential agency conflicts between...

Executive bonus plans often incorporate performance measures that exclude particular costs—a practice we refer to as “cost shielding.” Based on an agency theoretic framework, we predict that boards use cost shielding to (i) mitigate managerial myopia and (ii) encourage newer executives to...