À繫¿¬±¸ Á¦ ±Ç È£ (2014³â 11¿ù)
Asian Review of Financial Research, Vol., No..
pp.119~129
pp.119~129
Market-Based Executive Compensation under Asymmetric Information
Guangsug Hahn Division of Humanities and Social Sciences, POSTECH, Korea
Joon Yeop Kwon Graduate Program for Technology and Innovation Management, POSTECH, Korea
The paper investigates how long term value of publicly trading firm and its stock prices affect managerial compensation under asymmetric information. To do this, we incorporate Grossman and Stiglitz (1980) model into conventional principalagent problem. We analyze comparative statics of weights on the long term value and stock prices in managerial contract. Each weight is affected by information cost and supply shock. When traders are sufficiently averse to risk, as information cost decreases, the proportion of informed traders increases and this leads to the increases informativeness of stock prices. Then the weight on the long term value decreases and that on the stock prices increases. The changes of supply shock provide the reverse effect to the weights.
Guangsug Hahn
Joon Yeop Kwon
The paper investigates how long term value of publicly trading firm and its stock prices affect managerial compensation under asymmetric information. To do this, we incorporate Grossman and Stiglitz (1980) model into conventional principalagent problem. We analyze comparative statics of weights on the long term value and stock prices in managerial contract. Each weight is affected by information cost and supply shock. When traders are sufficiently averse to risk, as information cost decreases, the proportion of informed traders increases and this leads to the increases informativeness of stock prices. Then the weight on the long term value decreases and that on the stock prices increases. The changes of supply shock provide the reverse effect to the weights.