We examine differences in CEO achievement of EPS goals set separately through analyst forecasts and firm bonus plans. Having different goals for the same performance metric enables us to assess their relative importance in incentivizing CEOs. We find CEOs frequently achieve analyst forecasts,...

In the late 1990s, UtiliCorp United, a utility that owned natural gas and power assets in the Midwest and internationally, moved aggressively into the business of wholesale energy trading. The move came after Congress passed legislation that opened wholesale energy markets to competition, with...

Eugene Isenberg, CEO of Nabors Industries, was listed in a 2006 Wall Street Journal article as one of the highest paid executives in the U.S. over the previous 14 years. He received this compensation as a result of a unique bonus arrangement and large stock option grants with several favorable...

We examine whether board and ownership structure variables explain the level of chief executive officer (CEO) compensation. After controlling for standard economic determinants (i.e., the firm's demand for a high-quality CEO, firm performance, and risk), we find that board and ownership...

CEO compensation is a highly controversial subject. While most company directors believe that CEO pay is not a problem, the majority of the American public believes that it is. The difficulties that boards face in justifying CEO pay levels in some ways stem from the challenge of quantifying how...

The two major paradigmsin the theoretical agency literature aremoral hazard (i.e., hidden action)and adverseselection (i.e., hiddeninformation). Prior research typically solves these problemsin isolation, as opposed to simultaneouslyincorporating both adverseselection and moral hazard features....

Prior research argues that a manager whose wealth is more sensitive to changes in the firm's stock price has a greater incentive to misreport. However, if the manager is risk-averse and misreporting increases both equity values and equity risk, the sensitivity of the manager's wealth to changes...

Executive compensation has become one of the most contentious topics in corporate governance. However, public perception about executive pay suffers from many misconceptions. These include the notions that:1. The ratio of CEO-to-average-worker pay is a useful statistic:2. Compensation...