Author: Publisher:
ISBN:
Category :
Languages : en
Pages : 48
Book Description
Optimal Incentive Contracts in the Presence of Career Concepts
Author: Optimal incentive contracts in the presence of career concerns
Author: Robert GibbonsOptimal Incentive Contracts in the Presence of Career Concerns
Author: Robert GibbonsPublisher:
ISBN:
Category : Compensation management
Languages : en
Pages : 70
Book Description
This paper studies career concerns -- concerns about the effects of current performance on future compensation -- and describes how optimal incentive contracts are affected when career concerns are taken into account. Career concerns arise frequently: they occur whenever the market uses a worker's current output to update its belief about the worker's ability and competition then forces future wages (or wage contracts) to reflect these updated beliefs. Career concerns are stronger when a worker is further from retirement, because a longer prospective career increases the return to changing the market's belief. In the presence of career concerns, the optimal compensation contract optimizes total incentives -- the combination of the implicit incentives from career concerns and the explicit incentives from the compensation contract. Thus, the explicit incentives from the optimal compensation contract should be strongest when a worker is close to retirement. We find empirical support for this prediction in the relation between chief-executive compensation and stock-market performance.
Optimal Incentive Contracts for Sales Representatives in Different Career Stages
Author: Marzio KeilingFrom Concept to Wall Street
Author: Oren FuerstPublisher: FT Press
ISBN: 9780130348036
Category : Business & Economics
Languages : en
Pages : 366
Book Description
Two of the world's leading experts in venture-backed entrepreneurship offer a start-to-finish guide to the entire process: starting new companies, identifying and negotiating funding, and managing to--and through--IPOs or M&As.
Modern Labor Economics
Author: Ronald G. EhrenbergPublisher: Routledge
ISBN: 1351590138
Category : Business & Economics
Languages : en
Pages : 776
Book Description
Modern Labor Economics: Theory and Public Policy, now in its thirteenth edition, continues to be the leading text for one-semester courses in labor economics at the undergraduate and graduate levels. It offers a thorough overview of the modern theory of labor market behavior, and reveals how this theory is used to analyze public policy. Designed for students who may not have extensive backgrounds in economics, the text balances theoretical coverage with examples of practical applications that allow students to see concepts in action. Experienced educators for nearly four decades, co-authors Ehrenberg and Smith believe that showing students the social implications of the concepts discussed in the course will enhance their motivation to learn. As such, this text presents numerous examples of policy decisions that have been affected by the ever-shifting labor market. This new edition continues to offer: a balance of relevant, contemporary examples; coverage of the current economic climate; introduction to basic methodological techniques and problems; tools for review and further study. In addition to providing updated data and examples throughout, the thirteenth edition offers greater coverage of inequality, healthcare policy, and labor-replacing technologies. The text is also supported by a full range of companion online materials.
Subjective Performance Measures in Optimal Incentive Contracts
Author: George BakerPublisher:
ISBN:
Category :
Languages : en
Pages : 31
Book Description
Incentive contracts often include important subjective components that mitigate incentive distortions caused by imperfect objective measures. This paper explores the combined used of subjective and objective performance measures in implicit and explicit incentive contracts. It shows that the presence of sufficiently effective explicit contracts can render all implicit contracts infeasible, even those that would otherwise yield the first-best. It also shows, however, that in some circumstances objective and subjective measures are complements: neither an explicit nor an implicit contract alone yields positive profit, but an appropriate combination of the two does. Finally, subjective weights on objective measures are considered.
Optimal Incentive Contracts with Job Destruction Risk
Author: Borys GrochulskiPublisher:
ISBN:
Category :
Languages : en
Pages : 0
Book Description
We study the implications of job destruction risk for optimal incentives in a long-term contract with moral hazard. We extend the dynamic principal-agent model of Sannikov (2008) by adding an exogenous Poisson shock that makes the match between the firm and the agent permanently unproductive. In modeling job destruction as an exogenous Poisson shock, we follow the Diamond-Mortensen-Pissarides search-and-matching literature. The optimal contract shows how job destruction risk is shared between the rm and the agent. Arrival of the job-destruction shock is always bad news for the rm but can be good news for the agent. In particular, under weak conditions, the optimal contract has exactly two regions. If the agent's continuation value is below a threshold, the agent's continuation value experiences a negative jump upon arrival of the job-destruction shock. If the agent's value is above this threshold, however, the jump in the agent's continuation value is positive, i.e., the agent gets rewarded when the match becomes unproductive. This pattern of adjustment of the agent's value at job destruction allows the firm to reduce the costs of effort incentives while the match is productive. In particular, it allows the firm to adjust the drift of the agent's continuation value process so as to decrease the risk of reaching either of the two inefficient agent retirement points. Further, we study the sensitivity of the optimal contract to the arrival rate of job destruction.
Subjective Performance Measures in Optimal Incentive Contracts
Author: George Pierce BakerPublisher:
ISBN:
Category :
Languages : en
Pages : 31
Book Description
Incentive contracts often include important subjective components that mitigate incentive distortions caused by imperfect objective measures. This paper explores the combined used of subjective and objective performance measures in implicit and explicit incentive contracts. It shows that the presence of sufficiently effective explicit contracts can render all implicit contracts infeasible, even those that would otherwise yield the first-best. It also shows, however, that in some circumstances objective and subjective measures are complements: neither an explicit nor an implicit contract alone yields positive profit, but an appropriate combination of the two does. Finally, subjective weights on objective measures are considered.
Inducements in Organizations
Author: Nicolas TichyPublisher: BoD – Books on Demand
ISBN: 3947095090
Category : Business & Economics
Languages : en
Pages : 234
Book Description
Executive compensation has inspired controversial debate in both academia and the general public, and many voices criticize that executive compensation designs fail to deliver desired outcomes. Although much research has been devoted to understanding the antecedents and consequences of executive compensation design, important questions remain unanswered. This dissertation contributes to the field by exploring a previously neglected aspect: executive compensation complexity. Given the absence of an established measure of executive compensation complexity, there is an incomplete understanding of how complexity enters executive compensation contracts and what the consequences are for managers and corporations. The essays of this dissertation aim to narrow this gap. The first study presents a novel measure of executive compensation complexity, which is validated and utilized to examine the antecedents of executive compensation complexity. The second study explores the consequences of executive compensation complexity and finds that complexity impairs firm performance, regardless of the performance metric chosen (accounting-based, market-based, or ESG-based performance metrics). The third study explores the link between compensation design dispersion and executive turnover and reveals that executives with riskier compensation packages and fewer performance goals are more likely to move. The fourth study provides experimental evidence on the effect of CSR Fit dimensions and organizational reputation. Taken together, the essays of this dissertation make a significant and valuable contribution to the scholarly discourse on executive compensation. By shedding light on the complex nature of executive compensation and its implications for managers and corporations, this dissertation advances the current understanding of executive compensation and provides insights for policymakers, managers, and investors.