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Fair and Square: A ...
Fair and Square: A Retention Model of Managerial Compensation
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- Ellingsen, Tore (författare)
- Stockholm School of Economics,Handelshögskolan i Stockholm
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- Kristiansen, EG (författare)
- Norwegian School of Economics and Business Administration (NO)
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(creator_code:org_t)
- INFORMS (Institute for Operations Research and Management Sciences), 2022
- 2022
- Engelska.
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Ingår i: Management Science. - : INFORMS (Institute for Operations Research and Management Sciences). - 1526-5501 .- 0025-1909. ; 68:5, s. 3604-3624
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Abstract
Ämnesord
Stäng
- We propose a model of how the retention motive shapes managerial compensation contracts. Once employed, a risk-averse manager acquires imperfectly portable skills whose value is stochastic because of industry-wide demand shocks. The manager's actions are uncontractible, and the perceived fairness of the compensation contract affects the manager's motivation. If the volatility of profits is sufficiently large and outside offers are suffi-ciently likely, the equilibrium contract combines a salary with an own -firm stock option. The model's predictions are consistent with empirical regularities concerning contractual shape, the magnitude of variable pay, the lack of indexation, and the prevalence of discretionary severance pay.
Ämnesord
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business -- Economics (hsv//eng)
Publikations- och innehållstyp
- art (ämneskategori)
- ref (ämneskategori)
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