Miglo, A. (2009) Earnings-based compensation contracts under asymmetric information. Manchester School, 77(2), pp. 225-243. (doi: 10.1111/j.1467-9957.2008.02095.x)
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Abstract
We analyse a model with two-dimensional asymmetric information in which the employer has better information about the firm's earnings potential. The employee's contract consists of an annual bonus and stock options. We explain (1) how different degrees of asymmetric information about short-term earnings versus long-term earnings affect optimal contracts and (2) why firms offering more options have higher short-term performance and lower long-term performance. This provides new insights into the structure of earnings-based compensation.
| Item Type: | Articles |
|---|---|
| Status: | Published |
| Refereed: | Yes |
| Glasgow Author(s) Enlighten ID: | Miglo, Dr Anton |
| Authors: | Miglo, A. |
| College/School: | College of Social Sciences > Adam Smith Business School > Accounting and Finance |
| Journal Name: | Manchester School |
| Publisher: | Wiley |
| ISSN: | 1463-6786 |
| ISSN (Online): | 1467-9957 |
| Published Online: | 17 February 2009 |
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