An equilibrium model of incentive contracts in the presence of information manipulation

• 成果类型: Article
• 署名作者: Goldman, E; Slezak, SL
• 署名单位: University of North Carolina; University of North Carolina Chapel Hill; University System of Ohio; University of Cincinnati
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2005.05.007
• 发表日期: 2006
• 页码: 603-626
• 关键词: Executive compensation; information manipulation; governance; FRAUD

摘要

This paper develops an agency model in which stock-based compensation is a double-edged sword, inducing managers to exert productive effort but also to divert valuable firm resources to misrepresent performance. We examine how the potential for manipulation affects the equilibrium level of pay-for-performance sensitivity and derive several new cross-sectional implications that are consistent with recent empirical studies. In addition, we analyze the impact of recent regulatory changes contained in the Sarbanes-Oxley Act of 2002 and show how policies intended to increase firm value by reducing misrepresentation can actually reduce firm value or increase the upward bias in manipulated disclosures. (c) 2005 Elsevier B.V. All rights reserved.