The relative performance evaluation hypothesis postulates that market-wide and industry-wide performance should not affect the likelihood of CEO involuntary turnover. However, recent academic literature has documented that following poor industry and market performance the likelihood of CEO...

That people respond to incentives is a common belief. This became even stronger during the course of the financial crisis in 2008/09 as incentive schemes of banks are broadly considered as main reason for the crisis. This paper covers the question if and how incentives work evaluated by their...

Universities in Colombia initially focused on teaching. Some of them, both public and private, have reconsidered their vision and have been trying to develop policies to incorporate research among their priorities. Clear mechanisms of incentives for publications have been designed, with the aim...

For the past 30 years, the conventional wisdom has been that executive compensation packages should include very large proportions of incentive pay. This incentive pay orthodoxy has become so firmly entrenched that the current debates about executive compensation simply take it as a given. We...

I study the effect of chief executive officer (CEO) optimism on CEO compensation. Using data on compensation in US firms, I provide evidence that CEOs whose option exercise behavior and earnings forecasts are indicative of optimistic beliefs receive smaller stock option grants, fewer bonus...

What is the role of creditors in shaping the design of risk-taking incentives in managerial compensation? This paper provides empirical evidence by investigating how the trading of credit default swaps (CDS) shapes the design of CDS-referenced firm's managerial compen- sation, especially its...

Corporate governance systems exist to discourage self-interested behavior. One question that is often overlooked is how extensive these systems should be. A look at corporate governance today suggests that self-interest is high because companies are compelled - by regulators and the market - to...

I analyze how a firm should elicit advice from an expert on when to terminate a project with a stochastic lifespan. The firm cannot directly observe the project's lifespan, but imperfectly monitors its current state by observing incremental output. The expert directly observes the state of the...

This article explores a dynamic moral hazard setting in which a principal hires a team of agents for a project. As the project generates revenue upon completion, the principal incentivizes agents' efforts by designing bonuses for success. If bonuses are provided through spot or...