Stock-Based Compensation and CEO (Dis)Incentives

By Efraim Benmelech, Eugene Kandel, Pietro Veronesi. 2008

423 citations recorded by the source corpus.

View Paper: https://www.semanticscholar.org/paper/9a2e8d8b090db5880b797820a881db928f52d54b

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Accounting

In Finance

Citations in the corpus

Stock Liquidity and Stock Price Crash Risk (2016, background): “Using a hidden action model, Benmelech, Kandel, and Veronesi (2010) show that stock-based compensation induces managers to conceal bad news about future growth options, which results in inflated stock prices and subsequent crashes.”
Corporate Governance and Firm-Specific Stock Price Crashes (2016, positive): “However recent evidence suggests and finds that both CEOs and CFOs compensation structure may induce self-serving behavior [Healy (1985); Bergstresser and Phillippon (2006); Benmelech et al. (2010); Kim et al. (2011)] and thereby reduce corporate governance efficacy [Bebchuk et al. (2009)].”
Accruals and price crashes (2016, background): “10 Managers have a higher discount rate than shareholders because managers are less diversified, have a shorter horizon due to possible early departure from the firm or death, or both (Benmelech et al. 2010).”
Real Options Signaling Games with Applications to Corporate Finance (2011, neutral): “In order to account for declining returns to scale (that is, at some point the rm runs out of good project opportunities), we impose the Inada conditions, which are standard assumptions about the shape of production functions: H(0) = 0, H 0 > 0, H 00 < 0, H 0 (0) =1, and H 0 (1) = 0.”
Firm Life Cycle, Corporate Risk Taking, and Investor Sentiment (2017, positive): “However, firm profitability during the decline stage is again likely to deteriorate, because of negative NPV investments for firm survival (Benmelech et al. 2010).”
CEO Overconfidence and Stock Price Crash Risk (2016, background): “Consistent with Benmelech et al. (2010), Kim et al. (2011a) show that managerial equity incentives are positively related to crash risk.”
Managerial Ability, Investment Efficiency and Stock Price Crash Risk (2017, positive): “Benmelech et al. (2010) show that although stock-based compensation schemes granted to executives encourage them to take risk, such schemes also induce them to conceal bad news emanating from sub-optimal investment policies to support the pretense of high growth. Thus, bad news emanating from and ba”
Stock price crash risk: review of the empirical literature (2018, positive): “Two other models, Bleck and Liu (2007) and Benmelech, Kandel, and Veronesi (2010), also follow the agency-based view of crash risk.”
Executive Compensation: A Survey of Theory and Evidence (2017, positive): “33Bergman and Jenter (2007) make a related argument in the context of option compensation to employees rms award employees more options when they overvalue them, although due to sentiment rather than overcondence in a private signal.”
CFOs versus CEOs: Equity Incentives and Crashes (2011, positive): “managers can also choose suboptimal investment policies (Benmelech et al., 2010; McNichols and Stubben, 2008; Kedia and Philippon, 2009). For instance, McNichols and Stubben (2008) find that managers over-invest in property, plant, and equipment in the period of overstated earnings.”
Managerial Incentives and Stock Price Manipulation (2013, neutral): “From (5), the logarithm of the (gross-of-expected-pay) market price is given by:”
Abnormal real operations, real earnings management, and subsequent crashes in stock prices (2014, neutral): “…(not necessarily downward though)6: To strategically differentiate itself from its industry peers, a 5 In their dynamic rational expectations model, Benmelech et al. (2010) show that equity incentives may induce managers to conceal bad news about future growth options through investment policies.”