Principal-agent theory suggests that a manager should be paid relative to a benchmark that captures the effect of market or sector performance on the firm's own performance. Recently, it has been argued that we do not observe such indexation in the data because executives can set pay in their...

The valuation of illiquid or non-marketable assets is complicated by the fact that the discount rate cannot be computed by using the risk attributes of the asset along with market parameters. Rather, individual attitudes toward risk affect the discount rate. Some recent research has avoided this...

Proponents of EVA and related 'shareholder value' measures intend to replace earnings and to supplement stock returns by including their own measures in managerial compensation schemes. Stern Stewart's EVA appears to be the most widely recognized measure. However, there are not very many firms...