Is CEO Pay Really Inefficient? A Survey of New Optimal Contracting Theories

The authors argue that executive compensation is set by CEOs themselves rather than boards on behalf of shareholders, since many features of observed pay packages may appear inconsistent with the standard optimal contracting theories. However, it may be that the simple models do not capture several complexities of real-life settings. This paper surveys recent theories that extend traditional frameworks to incorporate these dimensions, and show … [ Read more ]

Differences Between European and American IPO Markets

What a treat! European Financial Management has a cool paper by Jay Ritter discussing the differences between the US and European IPO markets. For instance: did you know that in Germany there is a “when issued market” that allows trading in the shares prior to issuance. For what it is worth, this is sort of like how the opening lines are set … [ Read more ]