Managerial Incentives and Stock Price Manipulation

• 成果类型: Article
• 署名作者: Peng, Lin; Roeell, Ailsa
• 署名单位: City University of New York (CUNY) System; Baruch College (CUNY); Columbia University; Center for Economic & Policy Research (CEPR)
• 刊物名称: JOURNAL OF FINANCE
• ISSN/ISSBN: 0022-1082
• DOI: 10.1111/jofi.12129
• 发表日期: 2014
• 页码: 487-526
• 关键词: executive-compensation; ceo incentives; risk-aversion; to-market; pay; CONTRACTS; liquidity; BEHAVIOR; MODEL; equilibrium

摘要

We present a rational expectations model of optimal executive compensation in a setting where managers are in a position to manipulate short-term stock prices and the manipulation propensity is uncertain. We analyze the tradeoffs involved in conditioning pay on long- versus short-term performance and show how manipulation, and investors' uncertainty about it, affects the equilibrium pay contract and the informativeness of prices. Firm and manager characteristics determine the optimal compensation scheme: the strength of incentives, the pay horizon, and the use of options. We consider how corporate governance and disclosure regulations can help create an environment that enables better contracting.