| Titre : | Information-based stock trading, executive incentives, and the principal-agent problem (2010) |
| Auteurs : | Qiang Kang, Auteur ; Qiao Liu, Auteur |
| Type de document : | Article : texte imprimé |
| Dans : | Management science (Vol. 56 N° 4, Avril 2010) |
| Article en page(s) : | pp. 682-698 |
| Note générale : | Management |
| Langues : | Anglais |
| Index. décimale : | 658 (Organisation des entreprises. Techniques du commerce) |
| Tags : | Risk–incentive trade-off Endogenous information-based trading Pay-performance sensitivity Adjusted pin Calibration |
| Résumé : | We examine the role of information-based stock trading in affecting the risk–incentive relation. By incorporating an endogenous informed trading into an optimal incentive contracting model, we analytically show that, apart from reducing incentives, a greater risk increases the level of information-based trading, which consequently enhances executive incentives and offsets the negative risk–incentive relation. We calibrate the model and find that the economic magnitude of this incentive-enhancement effect is significant. Our empirical test using real-world executive compensation data lends strong support to the model prediction. Our results suggest that principals (boards of directors) should consider underlying stock trading characteristics when structuring executive incentives. |
| DEWEY : | 658 |
| ISSN : | 0025-1909 |
| En ligne : | http://mansci.journal.informs.org/content/56/4.toc |
