Footnote:
Nach Informationen von SSRN wurde die ursprüngliche Fassung des Dokuments January 16, 2008 erstellt
Description:
We model long-run firm performance, management compensation, and corporate governance in a dynamic, nonstationary world. We show that the relations between firm performance, managerial compensation, and governance policies, which in a single-period context can best be rationalized by managerial influence, arise naturally in this dynamic setting where managers have no power over governance policy. For example, passive quot;do-nothingquot; boards are associated with rising firm valuations; substantial variation in management pay is generated by luck; managerial diversion of firm resources for private consumption is likely to accompany stock price declines which immediately follow sustained increases. Further, the threat of corporate control changes can adversely affect firm value, and incentive compensation schemes such as stock grants may not produce as much shareholder value as simple salary compensation. Finally, we demonstrate that optimal governance and compensation structures are highly dependent on the firm's asset base, its legal environment, and the effectiveness of the corporate control market