【主讲】Melanie Cao 副教授 (York University)
【主题】Search for Optimal CEO Compensation: Theory and Empirical Evidence
【时间】2012年5月31日 (周四) 15：30-17：00
【地点】上海财经大学经济学院楼801室
【语言】英文
【摘要】We integrate an agency problem into search theory to study executive compensation in the market equilibrium. Assuming that a CEO can choose whether to stay with a firm or quit and search after privately observing an idiosyncratic productivity shock to the firm, we show that it is optimal for the firm to set the pay-to-performance ratio to be less than one even when the CEO is risk neutral. More importantly, our market equilibrium endogenizes CEOs' and firms' outside options to reflect the externalities. In equilibrium, the indirect effects of the risks on the contract via the outside options dominate the direct effects of the risks. As a result, the equilibrium incentive contract exhibits new and important features, which are con firmed by our empirical tests using executive compensation data from 1992 to 2009. First, the equilibrium pay-to-performance sensitivity depends positively on a firm's idiosyncratic risk, and negatively on the systematic risk. This is in contrast to agency models with exogenous outside options, where the two risks always affect the pay-to-performance sensitivity in the same way. This result offers a plausible explanation for why the empirical relationship between the pay-to- performance sensitivity and a firm's total risk is ambiguous. Second, the ratio of a CEO's total compensation to firm value depends positively on idiosyncratic risks and negatively on systematic risks.
