Executive rank, pay and project selection

• 成果类型: Article
• 署名作者: Barron, JM; Waddell, GR
• 署名单位: University of Oregon; Purdue University System; Purdue University
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/S0304-405X(02)00254-4
• 发表日期: 2003
• 页码: 305-349
• 关键词: Executive compensation; Agency theory; Incentive pay

摘要

This paper extends the literature on executive compensation by developing and testing a principal-agent model in the context of project selection. The model's focus on executive project selection decisions highlights the multidimensional nature of executive choices that affect the value of the firm. An executive not only makes an effort choice that determines the quality of information on which to base a decision but also sets the decision criteria for selecting projects. A project selection framework is also shown to introduce endogenous uncertainty into compensation that can influence the executive's effort choice. Using an extensive data set, our empirical work supports the main hypotheses of the model, including the significance of executive rank in determining the extent of use of incentive pay in general and equity-based incentive pay in particular. (C) 2002 Elsevier Science B.V. All rights reserved.