Earnings-based compensation contracts under asymmetric information

Miglo, A ORCID: https://orcid.org/0000-0002-9237-5293 2009, 'Earnings-based compensation contracts under asymmetric information' , The Manchester School, 77 (2) , pp. 225-243.

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Access Information: The Accepted Manuscript for this article is available Open Access at http://www.open-access.bcu.ac.uk/6239/1/ManchesterNEW9.pdf

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.

Item Type: Article
Schools: Schools > Salford Business School
Journal or Publication Title: The Manchester School
Publisher: Wiley
ISSN: 1463-6786
Related URLs:
Depositing User: Dr Anton Miglo
Date Deposited: 26 May 2021 08:33
Last Modified: 04 Nov 2021 14:34
URI: http://usir.salford.ac.uk/id/eprint/60387

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