Industrial Structure, Executives' Pay And Myopic Risk Taking.
This study outlines a new theory linking industrial structure to optimal employment contracts and value reducing risk taking. Firms hire their executives using optimal contracts derived within a competitive labour market. To motivate effort firms must use some variable remuneration. Such remuneration introduces a myopic risk taking problem: an executive would wish to inflate early expected earnings at some risk to future profits. To manage this some bonus pay is deferred. Convergence in ...Expand abstract
- Department of Economics (University of Oxford)
- Discussion paper series
- Publication date:
- Local pid:
- Deposit date:
- Copyright date: