Agency conflicts and short- versus long-termism in corporate policies
Autor: | Sebastian Gryglewicz, Erwan Morellec, Simon Mayer |
---|---|
Přispěvatelé: | Corporate Finance and Corporate Governance, Business Economics |
Rok vydání: | 2020 |
Předmět: |
Economics and Econometrics
capital structure security design Capital structure Strategy and Management continuous-time Microeconomics Accounting 0502 economics and business Agency (sociology) contracts Human multitasking multitasking 040101 forestry asymmetric benchmarking model 050208 finance Executive compensation Earnings Security design executive-compensation 05 social sciences investment 04 agricultural and veterinary sciences optimal short- and long-termism Investment (macroeconomics) agency conflicts stock-market 0401 agriculture forestry and fisheries Stock market Business dynamic agency Finance |
Zdroj: | Journal of Financial Economics, 136(3), 718-742. Elsevier |
ISSN: | 0304-405X |
DOI: | 10.1016/j.jfineco.2019.12.003 |
Popis: | We build a dynamic agency model in which the agent controls both current earnings via short-term investment and firm growth via long-term investment. Under the optimal contract, agency conflicts can induce short- and long-term investment levels beyond first best, leading to short- or long-termism in corporate policies. The paper analytically shows how firm characteristics shape the optimal contract and the horizon of corporate policies, thereby generating a number of novel empirical predictions on the optimality of short-versus long-termism. It also demonstrates that combining short- and long-term agency conflicts naturally leads to asymmetric pay-for-performance in managerial contracts. (C) 2019 Elsevier B.V. All rights reserved. |
Databáze: | OpenAIRE |
Externí odkaz: |