Pay for Short-Term Performance: Executive Compensation in Speculative Markets

Patrick Bolton, Jose Scheinkman and Wei Xiong

No 12107, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: We argue that the root cause behind the recent corporate scandals associated with CEO pay is the technology bubble of the latter half of the 1990s. Far from rejecting the optimal incentive contracting theory of executive compensation, the recent evidence on executive pay can be reconciled with classical agency theory once one expands the framework to allow for speculative stock markets.

JEL-codes: G1 G3 (search for similar items in EconPapers)
Date: 2006-03
New Economics Papers: this item is included in nep-bec, nep-fin and nep-fmk
Note: AP CF
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Citations: View citations in EconPapers (8)

Published as Bolton, Patrick, Jos Scheinkman and Wei Xiong. "Executive Compensation And Short-Termist Behaviour In Speculative Markets," Review of Economic Studies, 2006, v73(3,Jul), 577-610.

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