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Market-based executive compensation contract under endogenous information acquisition

Title
Market-based executive compensation contract under endogenous information acquisition
Authors
Hahn, G.Kwon, J.Y.
Date Issued
Sep-2019
Publisher
Korean Econometric Society
Abstract
The study investigates how a publicly traded firm��s liquidation value and stock price are used in an executive compensation contract when information acquisition in the asset market is endogenized. If the inside owner offers market-based compensation contract to the risk-averse manager, the inside owner expects higher utility than when stock prices are excluded from the contract. If information cost displays an intermediate value, changes in the exogenous parameters generate the direct effect and the indirect effect via the information market. Finally, we find that the market-based compensation contract contributes to the increase of social welfare. ? 2019, Korean Econometric Society. All rights reserved.
URI
http://oasis.postech.ac.kr/handle/2014.oak/100483
ISSN
1229-2893
Article Type
Article
Citation
Journal of Economic Theory and Econometrics, vol. 30, no. 3, page. 1 - 49, 2019-09
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한광석HAHN, GUANGSUG
Div of Humanities and Social Sciences
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