abstract The financial reporting and disclosure problems at Enron, as well as the high
market valuations for its stock raise troubling questions about the functioning of capital …

The benefits of stock options are often not large enough to offset the inefficiency implied by
the large divergence between the cost of options to companies and the value of options to …

We develop a model that clarifies how to measure CEO incentive strength and how to
reconcile the enormous differences in pay sensitivities between executives in large and …

The State of US Corporate Governance 27 tral role in the highly productive restructuring of
US corporations that took place during the 1980s and 1990s. But the changes did have an …

We calibrate the standard principal–agent model with constant relative risk aversion and
lognormal stock prices to a sample of 598 US CEOs. We show that this model predicts that …

We use a large database on ESO exercises to document characteristics of exercise behavior
and calibrate a utility-based model for measuring how differences in exercise behavior are …

Acquisitions enable target chief executive officers (CEOs) to remove liquidity restrictions on
stock and option holdings and diminish the illiquidity discount. Acquisitions also enable …

Whether equity-based compensation and equity ownership align the interests of managers
with stockholders is an important question in finance. Early studies found an inverted U …

The past two decades have seen a dramatic increase in the equitybased pay of US
corporate executives, an increase that has been driven almost entirely by the explosion of …

We will assess how governance and incentive problems contributed to Enron's rise and fall.
A well-functioning capital market creates appropriate linkages of information, incentives, and …