Compensation Rigging by Powerful CEOs : A Reply and Cross - Sectional Evidence ∗

Abstract

Wan (2013) argues that the statistical inferences in our Journal of Finance (2011) paper are not robust, as we do not prove that it is powerful CEOs that rig incentive contracts. Wan makes the theoretical claim that the rigging results are consistent with ex-post optimal re-contracting. However, optimal re-contracting cannot explain the loss in firm value… (More)

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