MAXIMIZING THE MARKET VALUE OF A FIRM TO CHOOSE DYNAMIC POLICIES FOR MANAGERIAL HIRING, COMPENSATION, FIRING AND TENURING

• 成果类型: Article
• 署名作者: ACHARYA, S
• 署名单位: Federal Reserve System - USA; Federal Reserve System Board of Governors
• 刊物名称: INTERNATIONAL ECONOMIC REVIEW
• ISSN/ISSBN: 0020-6598
• DOI: 10.2307/2526900
• 发表日期: 1992
• 页码: 373-397
• 关键词: unemployment; CONTRACTS; INFORMATION; incentives; principal; prices

摘要

Sequentially incentive compatible policies for compensation, replacement and tenuring of chief executive officers (CEOs) exist when a firm maximizes its market value and CEOs maximize their expected utility of wealth. In equilibrium. these policies induce CEOs lo implement their firm's highest profit potential. The market value of a firm increases following replacement of CEOs. The probability of removal of a CEO decreases in the expected profits of the firm. but increases in the CEO's risk aversion, the wage he can receive from the next best job opportunity, the cost of implementing instructions, and the firm's cost of capital.