Executive compensation: a calibration approach
We use a version of the Grossman and Hart principal-agent model with 10 actions and 10 states to produce quantitative predictions for executive compensation. Performance incentives derived from the model are compared with the performance incentives of 350 firms chosen from a survey by Michael Jensen and Kevin Murphy. The results suggest both that the model does a reasonable job of explaining the data and that actual incentives are close to the optimal incentives predicted by theory.
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Volume (Year): 12 (1998)
Issue (Month): 3 ()
|Note:||Received: August 12, 1997; revised version: October 27, 1997|
|Contact details of provider:|| Web page: http://link.springer.de/link/service/journals/00199/index.htm|
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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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