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Replication data for: Contractual Managerial Incentives with Stock Price Feedback

Resource Type
  • Lin, Tse-Chun
  • Liu, Qi
  • Sun, Bo
Publication Date
  • Abstract

    We study the effect of financial market frictions on managerial compensation. We embed a market microstructure model into an otherwise standard contracting framework, and analyze optimal pay-for-performance when managers use information they learn from the market in their investment decisions. In a less frictional market, the improved information content of stock prices helps guide managerial decisions and thereby necessitates lower-powered compensation. Exploiting a randomized experiment, we document evidence that pay-for-performance is lowered in response to reduced market frictions. Firm investment also becomes more sensitive to stock prices during the experiment, consistent with increased managerial learning from the market.
  • Is supplement to
    DOI: 10.1257/aer.20151310 (Text)
  • Lin, Tse-Chun, Qi Liu, and Bo Sun. “Contractual Managerial Incentives with Stock Price Feedback.” American Economic Review 109, no. 7 (July 2019): 2446–68.
    • ID: 10.1257/aer.20151310 (DOI)

Update Metadata: 2020-05-18 | Issue Number: 2 | Registration Date: 2019-12-06

Lin, Tse-Chun; Liu, Qi; Sun, Bo (2019): Replication data for: Contractual Managerial Incentives with Stock Price Feedback. Version: 1. ICPSR - Interuniversity Consortium for Political and Social Research. Dataset.