A copy of this work was available on the public web and has been preserved in the Wayback Machine. The capture dates from 2017; you can also visit the original URL.
The file type is
We study optimal renegotiation-proof compensation contracts when long-term information is valuable, but managers have a preference for early consumption. After managerial action is sunk, the firm has an incentive to renegotiate any long-term compensation program to provide the manager with liquidity. We show that when firms are transparent so that early information about firm performance is publicly available, compensation contracts cannot be made contingent on long-term performance. However,doi:10.1093/rfs/hhn095 fatcat:jvqxfpqywfhb5n2uao36qxamfe