Competition for talent under performance manipulation

• 成果类型: Article
• 署名作者: Marinovic, Ivan; Povel, Paul
• 署名单位: Stanford University; University of Houston System; University of Houston
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2017.04.003
• 发表日期: 2017
• 关键词: earnings management; executive-compensation; adverse selection; optimal-contracts; ceo incentives; common agency; equilibrium; INFORMATION; ECONOMICS; MODEL

摘要

We study the effects of introducing competition for CEOs, assuming that the talent of CEOs is not observable and that they can misreport their performance. Without competition for talent, firms maximize their profits by offering inefficiently low-powered incentive contracts. Competition for talent removes those inefficiencies, but it leads to excessively high-powered incentive contracts, causing efficiency losses that can be more severe than the inefficiencies that competition mitigates. If misreporting is not a concern, however, then competition for talent has unambiguously positive effects on efficiency. (C) 2017 Elsevier B.V. All rights reserved.