Replication data for: Contractual Managerial Incentives with Stock Price Feedback
- Lin, Tse-Chun
- Liu, Qi
- Sun, Bo
AbstractWe 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. https://doi.org/10.1257/aer.20151310.
- ID: 10.1257/aer.20151310 (DOI)
Update Metadata: 2020-05-18 | Issue Number: 2 | Registration Date: 2019-12-06