CEO’s Compensation Under the Threat of Illicit Behavior
Fleckinger, Pierre
CEO’s Compensation Under the Threat of Illicit Behavior - 2013.
88
We study the stockholder-manager relationship in a firm when an illicit strategy can be followed. We derive the optimal compensation offered by the firm and examine how it affects the CEO’s action. We then discuss the optimality of stock-options or free-stocks. Moreover, we analyze the link between the public policy and the CEO’s compensation; we prove that the fine level cannot be a substitute for a low level of detection. Finally, we point out that each protagonist has divergent preferences over the public policy regarding corporate fraud. JEL Classification JEL : J33, K21, K42, M12, M52
CEO’s Compensation Under the Threat of Illicit Behavior - 2013.
88
We study the stockholder-manager relationship in a firm when an illicit strategy can be followed. We derive the optimal compensation offered by the firm and examine how it affects the CEO’s action. We then discuss the optimality of stock-options or free-stocks. Moreover, we analyze the link between the public policy and the CEO’s compensation; we prove that the fine level cannot be a substitute for a low level of detection. Finally, we point out that each protagonist has divergent preferences over the public policy regarding corporate fraud. JEL Classification JEL : J33, K21, K42, M12, M52
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