Half of the jobs in the U.S. feature pay-for-performance. We derive novel incidence and optimum formulas for the overall rate of tax progressivity and the top tax rates on total earnings and bonuses, when such labor contracts arise from moral hazard frictions within firms. Optimal taxes account...

We study the nature of firm pay dynamics. To this end, we propose a statistical model that extends the seminal framework by Abowd, Kramarz and Margolis (1999) to allow for idiosyncratically time-varying firm pay policies. We estimate the model using linked employer-employee data for Sweden from...

Blockchain-based NFTs (non-fungible tokens) are uniquely identifiable digital representations of physical or digital items. Usually, the tokens are indivisible into smaller units. NFTs represent structured metadata referring to physical or digital objects. The tokens act as separate identifier...

We analyze the effects of optimism and overconfidence when the manager's compensation package includes severance pay and the CEO has bargaining power. We find that optimism does not affect incentive pay but increases severance pay with a negative effect on profit. Overconfidence, on the...

Economic disruptions generally create winners and losers. The compensation problem consists of designing a reform of the existing income tax system that offsets the welfare losses of the latter by redistributing the gains of the former. We derive a formula for the compensating tax reform and its...

Using novel data on companies' midyear pay actions taken in response to COVID-19 disruptions, I find that 30% of firms reduced CEOs' base salaries. Salary reductions served to "share the pain" with stakeholders. CEOs suffering salary cuts, however, often saw lower targets for annual and...

Recent trends in incentive compensation highlight two important features regarding performance-based rewards: (a) firms are offering rewards more frequently, and (b) firms are increasingly using tangible rewards in lieu of cash rewards to motivate employees. This study investigates how reward...

This paper examines the use of ESG performance metrics in executive compensation contracts. We first document that a growing fraction of publicly traded companies around the world now incorporate ESG metrics in the compensation schemes of their top executives. Our analysis links the reliance on...

This paper examines the use of ESG performance metrics in executive compensation contracts. We first document that a growing fraction of publicly traded companies around the world now incorporate ESG metrics in the compensation schemes of their top executives. Our analysis links the reliance on...

This paper investigates the relationship between the audit committee’s cash compensation and accrual earnings management. Using a sample of Chinese listed firms over the period 2007 to 2017, findings show a positive association between cash compensation of the audit committee and accrual...

An unprecedented number of firms announced CEO salary reductions at the onset of the coronavirus pandemic, which we argue was triggered by an exogenous increase in stakeholder outrage toward executive pay. We document that the overall compensation of these CEOs did not meaningfully decrease...

Research Question/Issue: Does inside debt compensation affect previous thought on compensation effects in IPOs? What explains variation in compensation when a company goes public? What is the composition of CEO compensation in an IPO? What types of compensation may be more optimal for or are...

Abstract. This study empirically investigates the relationship between independent directors’ cash compensation and the likelihood of corporate fraud. Using data of 2542 Chinese firms and 17239 firm years from 2010 to 2017, the findings of logistic regression, firm-fixed effects, instrumental...

Many employers link wages at the firm’s establishments outside of the home region to the level at headquarters. Multinationals that anchor-to-the headquarters also transmit wage changes arising from shocks to minimum wages and exchange rates in the home country/state to their foreign...

Competitive high ranking positions are largely occupied by men, and women remain scarce in engineering and sciences. Explanations for these occupational differences focus on discrimination and preferences for work hours and field of study. We examine if absent these factors gender differences in...

Mutual funds marketed as socially responsible funds (SRFs) face greater apparent burdens due to further non-financial filters applied to investments than conventional funds, that also restrict their investible universe. There is well reported evidence of unnecessary risk shifting and window...

This paper examines the impact of board governance mechanisms, namely board size, independence ratio, opacity of earnings disclosure, and ratio of genuinely independent nonexecutive directors to total board size on director remuneration, executive tenure and likelihood of individual executive...

We examine the efficacy of proxy voting to limit inflated CEO pay. We find that the percentage of dissenting votes that go against director-sponsored compensation proposals increases following a staggered rejection of the Inevitable Disclosure Doctrine (RIDD), which increases CEOs’ job...

This paper proposes a conceptual framework for the analysis of reward sharing schemes in mining pools, such as those associated with Bitcoin. The framework is centered around the reported shares in a pool instead of agents and introduces two new fairness criteria: absolute and relative...

I study the optimal compensation scheme in organizations in Shi (2020), in which agents connected in a network are endowed with the same ability, and work collectively to produce a team output. Connected agents can help neighbors to reduce the disutility of working. For any given network...

Cost heterogeneity is an important source of performance disparity among firms.This heterogeneity conditions the strategic decisions that firms make in the productmarket and can lead to heterogeneity in the design of managerial compensation contracts.I investigate the effect of cost...

This study adopts behavioral contract theory through a mathematical model and clarifies the situation in which a fixed–salary contract is preferable to incentives–based one for the principal. Theoretically, the expected utility for the principal is higher under an incentives–based contract...

We use a unique data set of over two million matched employer-employee-year observations in Italy over the 1994-2000 period to identify the causal effect of a quasi-exogenous shock to within-firm pay inequality on firm performance, investment, and payout policies. Consistent with our theoretical...

Highly luminescent and better colour purity red emitting Zn 2+ ion compensated Gd 2 O 3 :Eu 3+ , Li + nanophosphors were synthesized by the modified solvothermal combustion of metal-citrate complex in diethylene glycol. Morphology, crystallinity, spectroscopic and luminescence dynamics exhibited...

The traditional view of executive pay as a financial incentive to enhance firm performance that is often equated with shareholder value maximization has been put into question in the last few years. The rise of the new purpose of the corporation and stakeholder capitalism has put that...

Components of compensation have been analysed in previous studies of corporate financial variables of interest but never together to get a sense of the complete picture of what truly matters. This paper includes variable interactions using the difference-in-differences methodology for panel...

This paper examines the role of moral culpability in relation to legal duties to compensate. It explains why duties to compensate generally arise independently of culpability, but why culpability considerations still play a role in determining the incidence and extent of compensatory liability....

The hottest topic in corporate governance circles today involves company commitments to and pursuit of ESG (environmental, social, and governance) initiatives in addition to the traditional pursuit of profits. One facet of this debate has to do with how to motivate executives to pursue ESG...

Im organisierten Sport, insbesondere in den Großvereinen des Freiburger Kreises, gibt es eine zunehmende Professionalisierung. Dieses hauptamtliche Personal muss vergütet werden. Zu den Vergütungsstrukturen, Vergütungsniveaus und Vergütungssystemen gibt es, wie in großen Teilen der...

Over the past 20 years, there has been a dramatic increase in the share of executive compensation paid through stock options. In this paper, we examine the extent to which tax policy has influenced the composition of executive compensation, and discuss the implications of rising stock-based pay...

We study the initiation effect of credit default swaps on CEOs performance-sensitive compensation and shareholder value. We find that the initiation effect of CDS contracts on CEO’s delta varies by the characteristics of firms. Firms with higher R&D and intangibles reduce CEO’s delta whereas...

We examine a general equilibrium dynamic economy in which each firm i) hires a manager who can divert cash flows and ii) can fire him after poor performance, generating costs to both parties.The contract is terminated when the manager's continuation value reaches his compensation at another firm...

Incentive schemes that reward participants based on their relative performance are often thought to be particularly risk-inducing. Using a novel, real-effort task experiment in the laboratory, we find that the relationship between incentives and risk-taking is more nuanced and depends critically...

When wages are transparent, sales agents may compare their pay with that of their peers and experience positive or negative feelings if those peers are paid (respectively) less or more. We investigate the implications of such social comparisons on sales agents’ effort decisions and their...

Eighty-nine percent of S&P500 companies report benchmarking CEO pay components. Analyzing a panel of CEO compensation data entailing 1,251 S&P 1500 firms during 2007-2013, we find that: 1) total compensation benchmarking less effectively explains CEO compensation than does component-of-pay...

Evidence from Current Population Surveys through 1997, various cohorts of the National Longitudinal Surveys, and the Panel Study of Income Dynamics suggests that the fraction of American employees paid salaries stayed constant from the late 1960s through the late 1970s, but fell slightly...

This paper reviews a set of 230 judicial decisions collected by the author which Japanese courts rendered in disputes over claims of corporate directors to their pay between 1953 and 2018 in order to investigate what role litigation in the courts has played in relation to Japan's executive...

We survey directors and investors on the objectives, constraints, and determinants of CEO pay. 67% of directors would sacrifice shareholder value to avoid controversy on CEO pay, implying they face significant constraints other than participation and incentive compatibility. These constraints...

We examine the impact of optimistic directors that are members of boards and compensation committees on CEOs compensation. We find that optimistic boards and compensation committees reward CEOs with a higher proportion of equity-based compensation. We utilize two natural experiments,...

We examine how the level and structure of CEO pay is influenced by the characteristics and past experience of the members of the compensation committee, and also how these characteristics and experiences affect the probability of committee appointment. Our main findings indicate that (1) CEO pay...

We survey directors and investors on the objectives, constraints, and determinants of CEO pay. 67% of directors would sacrifice shareholder value to avoid controversy on CEO pay, implying they face significant constraints other than participation and incentive compatibility. These constraints...

We examine the impact of compensation committee members’ (CC members’) age on CEO compensation using FTSE 350 firms for the period 2002 to 2017. Sociological theory suggests that age is a significant demographic factor influencing individuals’ behaviour. We argue that monitoring intensity...

Racial gap in corporate leadership has prompted continuous and intense discussions, motivating research into the conditions minorities face after they reach top management positions. We contribute to the ongoing debate in this area by examining the association between CEO race and compensation....

This paper examines the use and consequences of shared compensation plans (profit sharing, profit related pay, SAYE schemes and company stock option plans) in a sample of UK workplaces and firms in the 1990s. The use of these plans has increased over time, in part in response to government...