When Less Is More: The Benefits of Limits on Executive Pay

• 成果类型: Article
• 署名作者: Cebon, Peter; Hermalin, Benjamin E.
• 署名单位: University of Melbourne; University of California System; University of California Berkeley
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhu140
• 发表日期: 2015
• 页码: 1667
• 关键词: optimal incentive contracts; corporate governance; moral hazard; COMPENSATION; performance; principal; agent; firm; ceo; Vietnam

摘要

We derive conditions under which limits on executive compensation can enhance efficiency and benefit shareholders (but not executives). Having its hands tied in the future allows a board of directors to credibly enter into relational contracts with executives that are more efficient than performance-contingent contracts. This has implications for the ideal composition of the board. The analysis also offers insights into the political economy of executive-compensation reform.