In this study, we examine how business strategies affect compensation contracting and performance evaluation. Using textual measures of business strategies derived from corporate 10-K filings, we find that firms adopting the operational excellence strategy place a higher compensation weight on...

This study focuses on the relation between current compensation and past performance measures as signals of a CEO’s ability. We develop a simple two-period principal-agent model with moral hazard and adverse selection and test theoretical predictions using CEO compensation data from 1993-2006....

We examine whether short-term financial reporting objectives related to executive compensation and employment horizons affect managers' decisions to undertake accelerated share repurchases (ASRs) versus open market repurchases (OMRs). In an ASR, the firm repurchases borrowed shares and...

We examine whether U.S. firms' M&A decisions influence the likelihood of voluntary adoption of clawback provisions in executive compensation contracts and whether clawback adoption improves subsequent M&A decisions. Because prior research finds that poor M&A decisions are associated with future...

Agency theory predicts that tighter monitoring can motivate managers to exert higher effort. However, psychology theory suggests that managers may perceive increased monitoring as an indication of distrust, thereby reducing their effort level--known as a crowding-out effect. Prior research on...

Agency theory predicts that tighter monitoring can motivate managers to exert higher effort. However, psychology theory suggests that managers may perceive increased monitoring as an indication of distrust, thereby reducing their effort level -- known as a crowding-out effect. Prior research on...