Theory
Working Paper
Executive Compensation: A Modern Primer
This article studies traditional and modern theories of executive compensation, bringing them together under a unifying framework. We analyze assignment models of the level of pay, and static and dynamic moral hazard models of incentives, and...Read more
The Informativeness Principle Without the First-Order Approach
Holmström (1979) provides a condition for a signal to have positive value assuming the validity of the first-order approach. This paper extends Holmström's analysis to settings where the first-order approach may not hold. We provide a new...Read more
The Value of Informativeness for Contracting
The informativeness principle demonstrates qualitative benefits to increasing signal precision. However, it is difficult to quantify these benefits - and compare them against the costs of precision - since we typically cannot solve for the...Read more
The Value of Performance Signals Under Contracting Constraints
This paper studies the value of additional performance signals under contract- ing constraints, such as limited liability, monotonicity, or upper bounds to pay or incentives. We show that - contrary to the informativeness principle - infor-...Read more
The Team Production Model as a Paradigm
This paper forms part of the proceedings for the 6th Annual Berle Symposium (2014), which focused on Margaret Blair and Lynn Stout?s 1999 Virginia Law Review article <a href="http://ssrn.com...Read more
A Theory of Income Smoothing When Insiders Know More Than Outsiders
We develop a theory of income and payout smoothing by firms when insiders know more about income than outside shareholders, but property rights ensure that outsiders can enforce a fair payout. Insiders set payout to meet outsiders? expectations...Read more
Blood and Money: Kin altruism, governance, and inheritance inthe family firm
This paper develops a theory of governance and inheritance within family firms based on kin altruism (Hamilton, 1964). Family members weigh the payoffs to relatives in proportion to relatedness. The theory shows that family management entails...Read more
Corporate Social Responsibility and Firm Risk: Theory and Empirical Evidence
This paper presents an industry equilibrium model where firms have a choice to engage in corporate social responsibility (CSR) activities. We model CSR as an investment to increase product differentiation that allows firms to benefit from higher...Read more
Contracting With Synergies
This paper studies multi-agent optimal contracting with cost synergies. We model synergies as the extent to which effort by one agent reduces his colleague's marginal cost of effort. An agent's pay and effort depend on the synergies he exerts,...Read more
