We examine the impact of overconfidence on compensation structure. We test alternative hypotheses, drawing upon and extending existing theories. Our findings support the exploitation hypothesis: firms offer incentive-heavy compensation contracts to overconfident CEOs to exploit their...

Do executives demand a premium for working in polluted environments? We develop a model of optimal CEO compensation and find empirical support for its prediction that pollution will induce a higher fixed wage, but lower incentive pay. This is the case even if we exclude polluting firms. We...

We propose and test the hypothesis that overconfident-CEOs, with upwardly-biased estimates of own firm-value, are more predisposed to repurchasing stock. An implication is that the stock-market, recognizing overconfident-CEO behavior, will react less positively to repurchase announcements. The...