This paper develops an account of the role and significance of rent extraction in executive compensation. Under the optimal contracting view of executive compensation, which has dominated academic research on the subject, pay arrangements are set by a board of directors that aims to maximize...

Intro -- Contents -- Preface -- Introduction -- Part I. The Official View and Its Shortcomings -- 1. The Official Story -- 2. Have Boards Been Bargaining at Arm's Length? -- 3. Shareholders' Limited Power to Intervene -- 4. The Limits of Market Forces -- Part II. Power and Pay -- 5. The...

The standard narrative of the meltdown of Bear Stearns and Lehman Brothers assumes that the wealth of the top executives of these firms was largely wiped out along with their firms. In the ongoing debate about regulatory responses to the financial crisis, commentators have used this assumed fact...

This paper develops an account of the role and significance of rent extraction in executive compensation. Under the optimal contracting view of executive compensation, which has dominated academic research on the subject, pay arrangements are set by a board of directors that aims to maximize...