OBJECTIVE To examine the impact of financial compensation on pediatric asthma research participation decision-making and determine whether perceptions of fair compensation differed for parents and adolescents, lower and higher income participants, and compensation-informed and uninformed participants in minimal and above minimal risk research. STUDY DESIGN Adolescents (n = 36) with asthma and...

The financial crisis renewed interest in the relation between pay-for-performance compensation and risk taking incentives. We examine whether paying top executives with options induces them to take more risk. To identify the causal effect of options, we exploit two distinct sources of variation in option compensation that arise from institutional features of multi-year grant cycles. We find tha...

This paper constructs and estimates a generalized Roy model with human-capital accumulation and moral hazard to control for self-selection by executives across firms and jobs. It uses the estimated model to decompose the firm-size pay gap into five sources, namely: (1) utility from working, (2) divergence in incentives, (3) monitoring, (4) demand, and (5) human-capital accumulation. It finds no...

E xecutive compensation is a topic that has received attention both in the media and the academic literature. This article discusses issues relevant to the construction and interpretation of compensation …gures typically reported in both sources. First, it is not clear what precisely should be included within a measure of the chief executive o¢ cer’s (CEO’s) income tied to his …rm. Second, the ...

The aim of this paper is to study the effects of product market competition on the explicit compensation packages that firms offer to their executives. In order to measure the net effect of competition we use two different identification strategies. The first exploits cross sectoral variation in concentration ratios and the panel nature of the dataset. The second uses as a quasi-natural experim...

Using hand-collected data, we document the details of the ex-ante severance contract and the ex-post separation pay given to S&P500 CEOs upon departing from their company. We analyze for the determinants of whether or not a departing CEO receives separation pay in excess of her severance contract. This excess separation pay is on average, $8 million, which amounts to close to 242% of a CEO’s an...

We analyze the impact of the existence of bad-tail risks on the decision to pay managers in stocks or in options and find that, contrary to conventional wisdom that options incent higher risk-taking, options are sometimes the superior vehicle for limiting managerial incentives to take bad-tail risks. Though options have not been the dominant form of compensation in the financial services indust...

We study management turnover in the set of top 5 executives for a sample of 443 large firms from 1993-1998. Using information from news articles and severance disclosures in proxy statements, we find that the rate of forced turnover for non-CEOs is at least as great as the rate for CEOs, but the sensitivity of turnover to aggregate firm performance is relatively smaller for non-CEOs. The probab...

The literature on relational incentive contracts suggests that rms may be able to condition payments to employees on information that is not available to those outside the rm. Given this, market participants may use the magnitude of such payments to infer the non-public information, which then may give rms a reason to choose wage payments strategically. We combine the literatures on relational ...

This paper studies the e¤ect of changes in foreign competition on the structure of compensation and incentives of U.S. executives. We measure foreign competition as import penetration, and use tari¤s and exchange rates as instrumental variables to estimate its causal e¤ect on pay. We …nd that higher foreign competition leads to more incentive provision in a variety of ways. First, it increases ...