Capital structure and executive compensation contract design: A theoretical and empirical analysis

研究成果: Article同行評審

9 引文 斯高帕斯(Scopus)

摘要

Compensation contracts including incentive instruments not only provide executives with positive incentives to increase shareholder wealth, but also create a negative value-dilution effect for existing shareholders. This study investigates this dilemma by conducting a benefit-cost analysis under a proposed structural form valuation framework. Our design mechanism shows that, given their firms' current capital structure, shareholders are always capable of designing an optimal compensation contract to maximize their wealth. Due to the different research issue and assumptions, unlike findings of most previous studies, our model proposes that in a firm with a higher leverage ratio shareholders should provide a contract with higher incentive intensity for managers, and this proposition is supported by the empirical analyses which examine the sample of S&P index firms over the period 1992-2006 after adopting an updated fixed effects model.

原文English
頁(從 - 到)209-224
頁數16
期刊Journal of Banking and Finance
36
發行號1
DOIs
出版狀態Published - 2012 1月

All Science Journal Classification (ASJC) codes

  • 金融
  • 經濟學與計量經濟學

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