Earnings-Based Compensation Contracts Under Asymmetric Information
Loading...
Authors
Miglo, Anton
Issue Date
2009-03
Type
Article
Language
en_US
Keywords
Accounting , Finance
Alternative Title
Abstract
We analyse a model with two-dimensional asymmetric information in which the employer has better information about the firm’s earnings potential. The employee’s contract consists of an annual bonus and stock options. We explain (1) how different degrees of asymmetric information about short-term earnings versus long-term earnings affect optimal contracts and (2) why firms offering more options have higher short-term performance and lower long-term performance. This provides new insights into the structure of earnings-based compensation.
Description
The final published copy can be bought from the publisher at http://onlinelibrary.wiley.com/doi/10.1111/j.1467-9957.2008.02095.x/abstract
Citation
Miglo, A.(2009, March). Earnings-Based Compensation Contracts Under Asymmetric Information. The Manchester School,77 (2), 25 - 243.
Publisher
Blackwell Publishing Ltd.