Executive Compensation: Six Questions That Need Answering
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Abowd, John M.; Kaplan, David
This article address six questions concerning executive compensation, drawing on recent advances in the study of executive compensation, including the role of stock and option holdings: How much does executive compensation cost the firm? How much is executive compensation worth to the recipient? How well does executive compensation work? What are the effects of executive compensation? How much executive compensation is enough? Could executive compensation be improved? Our discussion will focus on the role of agency theory, which predicts that stock-based compensation will align executive and shareholder interests by linking the executive's compensation directly to increases in the market value of the company.
Supplementary materials include Stata and Excel datasets.
Journal of Economic Perspectives
Personnel Management; Executive Compensation
Published version without supplementary materials
Previously Published As
Abowd, John, M., and David S. Kaplan. 1999. "Executive Compensation: Six Questions That Need Answering." Journal of Economic Perspectives, 13 (4): 145-168.
Attribution-NonCommercial-NoDerivatives 4.0 International
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