- 著者
- OGAKU Michiko
- 出版者
- University of Tsukuba. Graduate School of Systems and Information Engineering. Doctoral Program in Social Systems & Management
- 巻号頁・発行日
- 2013-06
This paper investigates why some business firms do not find it necessary to relyon explicit contracts to resolve incentive problems, even though they have recourseto contractible financial measures. Implicit incentives, such as career concerns,play a key role in those firms. Using the Normal-Exponential (CARA-Gaussian)model and assuming that the firms in this study have both contractible and noncontractible measures, this paper implies that some firms may wish to give their managers disincentives, if possible, because their managers have been overworking.
- 著者
- OGAKU Michiko
- 出版者
- University of Tsukuba. Graduate School of Systems and Information Engineering. Doctoral Program in Social Systems & Management
- 巻号頁・発行日
- 2013-06
This note provides the criterion for an information system for an optimal incentivescheme under plausible assumptions about firm managers: the agent has careerconcerns and there are not only contractible observables but also non-contractibleobservables. The covariance relation between the likelihood ratios of the informationsystems is found to be sufficient to recognise the information systems’ feasibility as a basis of an incentive scheme. Furthermore, it is shown that the criterion can specify more unfeasible information systems than Kim’s mean preserving spread criterion.
- 著者
- OGAKU Michiko
- 出版者
- University of Tsukuba. Graduate School of Systems and Information Engineering. Doctoral Program in Social Systems & Management
- 巻号頁・発行日
- 2013-05
This paper studies the economic consequences of choosing two differenttypes of executive compensation contracts. The analysis is based on a two-periodagency model in which compensation contracts are subject to renegotiation; compensationis paid based on the agent’s earnings report (e.g., a performance-based contract)or a non-verifiable measure within the firm (e.g., a conventional implicit contract).According to the analysis, conventional implicit contracts can dominate performancebasedcontracts if the non-verifiable measure is sufficiently informative so that theagent’s earnings report is not significantly considered during renegotiation. However,if the agent has strong bargaining power, the performance-based contract is optimal.The theoretical findings have implications for empirical compensation research. First,the firms’ compensation policy may not serve as a useful test for identifying profitablefirms. Second, the combination of the compensation policy and the ownership structureis likely to be associated with the level of executive compensation.