In this paper we explore two regulatory paradigms, with an emphasis on the regulation of executive compensation. An example of the traditional rule-based paradigm is Internal Revenue Code Section 162(m) in which a tax-deductible cap was passed into law to limit executive compensation. We...

We present evidence that managerial responses to voluntary clawback adoptionsdepend on compensation incentives that can induce capital investment mix shifts and reducecapital investment efficiency. Specifically, we find that managers incentivized by high levels ofperformance-based pay and...