Academics have long argued that incentive contracts for executives should be indexed to remove the influence of exogenous market factors. Little evidence has been found that firms engage in such practices, also termed 'relative performance evaluation'. We argue that firms may not gainmuch by...

We study the motive of using equity-based pay in executive compensation: the risk-sharing motive versus the performance-measuring motive. The empirical design goes through the relationship between equity-based pay and stock price informativeness (SPI). We find equity-based pay decreases in SPI,...

We study the effects of stock price informativeness (SPI) on the complexity of executive compensation. Using textual analysis of SEC proxy statements to construct measures of compensation complexity, we find informative stock prices reduce pay complexity. Using mutual fund redemption as an...

Competitive sorting models of the CEO labor market (e.g., Edmans, Gabaix and Landier (2009)) predict that differences in CEO productive abilities, or "talent", should be an important determinant of CEO pay. However, measuring CEO talent empirically represents a major challenge. In this paper, we...

We examine the effect of auditor expertise on managerial equity-based compensation. Consistent with theories that predict that firms will grant more equity-based compensation to their managers when financial statement manipulation is more likely to be detected, we find strong evidence that firms...

A purported dark side to powerful equity-based incentives is that they may induce the manager to manipulate stock prices by distorting information. Recent theories predict that firms will grant more equity-based incentives to their managers when the detection of such information manipulation is...