ANALYSIS FOR THE OPTIMAL CONTRACT WITH STOCK GRANTS
The research on the optimal design of securities grants is still in its infancy. In this paper, a simple dynamic model of the relationship between a firm and its chief executive officer is established. The optimal long-term compensation with limited commitment is analyzed under complete information. The main result is that, in the environment of symmetric information, managers continuation utility is equal to his reservation utility. If stock grants are not used as deferred compensation, the optimal contract collapses to a series of short term contracts. When stock grants are used, however, inclusion of stock grants in the compensation package could not be implemented to achieve higher firm value.
Ezecutive stock grants Moral hazard Optimal contract Symmetric information
WEI-MIN MA WU-JI LIN ZHI-FANG YU
School of Economics and Management, Tongji University, Shanghai 200092, China School of Economics an School of Economics and Management, Beijing University of Aeronautics and Astronautics, Beijing 1000
国际会议
2008 International Conference on Machine Learning and Cybernetics(2008机器学习与控制论国际会议)
昆明
英文
1681-1686
2008-07-12（万方平台首次上网日期，不代表论文的发表时间）