Managerial Incentives And Stock Price Manipulation

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Managerial Incentives and Stock Price Manipulation

Author : Lin Peng
Publisher :
ISBN 13 :
Total Pages : 48 pages
Book Rating : 4.:/5 (436 download)

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Book Synopsis Managerial Incentives and Stock Price Manipulation by : Lin Peng

Download or read book Managerial Incentives and Stock Price Manipulation written by Lin Peng and published by . This book was released on 2009 with total page 48 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a rational expectations model of optimal executive compensation in a setting where managers are in a position to manipulate short-term stock prices, and managers' propensity to manipulate is uncertain. Stock-based incentives elicit not only productive effort, but also costly information manipulation. We analyze the tradeoffs involved in conditioning pay on long- versus short-term performance and characterize a second-best optimal compensation scheme. The paper shows manipulation, and investors' uncertainty about it, affects the equilibrium pay contract and the informational efficiency of asset prices. The paper derives a range of new cross-sectional comparative static results and sheds light on corporate governance regulations.

Managerial Incentives and Stock Price Manipulation

Author : Lin Peng
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (465 download)

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Book Synopsis Managerial Incentives and Stock Price Manipulation by : Lin Peng

Download or read book Managerial Incentives and Stock Price Manipulation written by Lin Peng and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper presents a rational expectations model of optimal executive compensation in a setting where managers are in a position to manipulate short-term stock prices, and managers' propensity to manipulate is uncertain. Stock-based incentives elicit not only productive effort, but also costly information manipulation. We analyze the tradeoffs involved in conditioning pay on long- versus short-term performance and characterize a second-best optimal compensation scheme. The paper shows manipulation, and investors' uncertainty about it, affects the equilibrium pay contract and the informational efficiency of asset prices. The paper derives a range of new cross-sectional comparative static results and sheds light on corporate governance regulations.

Managerial Incentives and Stock Price Manipulation

Author : Lin Peng
Publisher :
ISBN 13 :
Total Pages : 62 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Managerial Incentives and Stock Price Manipulation by : Lin Peng

Download or read book Managerial Incentives and Stock Price Manipulation written by Lin Peng and published by . This book was released on 2014 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: We present a rational expectations model of optimal executive compensation in a setting where managers are in a position to manipulate short-term stock prices and the manipulation propensity is uncertain. We analyze the tradeoffs involved in conditioning pay on long- versus short-term performance and show how manipulation, and investorsņuncertainty about it, affects the equilibrium pay contract and the informativeness of prices. Firm and manager characteristics determine the optimal compensation scheme: the strength of incentives, the pay horizon, and the use of options. We consider how corporate governance and disclosure regulations can help create an environment that enables better contracting.

Special Section: Contests, Managerial Incentives, Stock Price Manipulation, and Advance Selling Strategies

Author :
Publisher :
ISBN 13 :
Total Pages : 118 pages
Book Rating : 4.:/5 (931 download)

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Book Synopsis Special Section: Contests, Managerial Incentives, Stock Price Manipulation, and Advance Selling Strategies by :

Download or read book Special Section: Contests, Managerial Incentives, Stock Price Manipulation, and Advance Selling Strategies written by and published by . This book was released on 2013 with total page 118 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Managerial Compensation and Stock Price Manipulation

Author : Josef Schroth
Publisher :
ISBN 13 :
Total Pages : 68 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Managerial Compensation and Stock Price Manipulation by : Josef Schroth

Download or read book Managerial Compensation and Stock Price Manipulation written by Josef Schroth and published by . This book was released on 2018 with total page 68 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper studies the role of optimal managerial compensation in reducing uncertainty about manager reporting objectives. It is shown that, paradoxically, firm owners allow managers with higher propensity to manipulate the short-term stock price to push for higher-powered and more short-term focused equity incentives. Such managers also work harder, and manipulate more, but may not generate higher firm profits. The model is consistent with existing empirical findings about the relationship between manipulation and equity pay, suggesting that heterogeneity in manager manipulation propensities may be an important driver of heterogeneity in pay. Novel testable predictions are developed.

Information Aggregation, Investment, and Managerial Incentives

Author : Elias Albagli
Publisher :
ISBN 13 :
Total Pages : 36 pages
Book Rating : 4.:/5 (124 download)

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Book Synopsis Information Aggregation, Investment, and Managerial Incentives by : Elias Albagli

Download or read book Information Aggregation, Investment, and Managerial Incentives written by Elias Albagli and published by . This book was released on 2011 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Firm and Managerial Incentives to Manipulate the Timing of Project Resolution

Author : David A. Hirshleifer
Publisher :
ISBN 13 :
Total Pages : 40 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Firm and Managerial Incentives to Manipulate the Timing of Project Resolution by : David A. Hirshleifer

Download or read book Firm and Managerial Incentives to Manipulate the Timing of Project Resolution written by David A. Hirshleifer and published by . This book was released on 2014 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: A manager who wants to be viewed favorably has an incentive to advance or delay the arrival of information about his firm's profitability. In the model, a high ability manager tries to advance resolution of a likely-favorable outcome, while a low ability manager may defer resolution. Such manipulation of information arrival causes greater investment in execution projects (which tend to resolve early) than exploratory projects (which tend to resolve late), and affects investment in hastening or retarding project resolution. In contrast with previous literature, in some cases managers may secretly overinvest. The model offers empirical implications about innovative versus conventional investments, associated stock price reactions, and corporate control. The theory also implies a perverse sorting of high ability managers to conventional activities and low ability managers to visionary enterprises.

Managerial Incentives in an Enterpreneurial Stock Market Model

Author : Richard E. Kihlstrom
Publisher :
ISBN 13 :
Total Pages : 0 pages
Book Rating : 4.:/5 (135 download)

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Book Synopsis Managerial Incentives in an Enterpreneurial Stock Market Model by : Richard E. Kihlstrom

Download or read book Managerial Incentives in an Enterpreneurial Stock Market Model written by Richard E. Kihlstrom and published by . This book was released on 1988 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Managerial Incentives, Fraud, and Monitoring

Author : H. David Robison
Publisher :
ISBN 13 :
Total Pages : 36 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Managerial Incentives, Fraud, and Monitoring by : H. David Robison

Download or read book Managerial Incentives, Fraud, and Monitoring written by H. David Robison and published by . This book was released on 2008 with total page 36 pages. Available in PDF, EPUB and Kindle. Book excerpt: Equity-based compensation, while inducing greater managerial effort, also provides incentives for managers to fraudulently inflate a firm's stock price. This paper examines the owners' optimal contract in the face of these conflicting incentives when it is sometimes possible for the manager to commit fraud and the public disclosure of fraud harms the underlying value of the firm. The analysis shows that an increase in the likelihood of fraud can actually increase the attractiveness of equity compensation and the value of the firm. Ironically, while monitoring decreases the likelihood of fraud, it may indirectly increase the severity of fraud when fraud occurs.

Managerial Incentives and Corporate Fraud

Author : Shane A. Johnson
Publisher :
ISBN 13 :
Total Pages : 40 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Managerial Incentives and Corporate Fraud by : Shane A. Johnson

Download or read book Managerial Incentives and Corporate Fraud written by Shane A. Johnson and published by . This book was released on 2011 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: Operating and stock return results imply that managers that commit fraud likely anticipate large stock price declines if they do not misreport earnings. Stock price declines cause greater losses for managerial stockholdings than for option holdings because of differences in payoff convexity. Fraud firms have significantly greater incentives from unrestricted stockholdings than control firms do, and unrestricted stockholdings are the largest source of incentives at fraud firms. Collectively, these results emphasize the importance of the shape and vesting status of managerial incentive payoffs in providing incentives to commit fraud. Fraud firms also have characteristics that suggest a lower likelihood of fraud detection, which implies lower expected costs of fraud. Overall, the results are consistent with the economic theory of crime.

Managerial Incentives and Its Credibility for Voluntary Announcements

Author : Nino Papiashvili
Publisher :
ISBN 13 :
Total Pages : 28 pages
Book Rating : 4.:/5 (13 download)

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Book Synopsis Managerial Incentives and Its Credibility for Voluntary Announcements by : Nino Papiashvili

Download or read book Managerial Incentives and Its Credibility for Voluntary Announcements written by Nino Papiashvili and published by . This book was released on 2019 with total page 28 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this research I find that stock market participants react differently to firms' voluntary announcements depending on the credibility they lend to the announcing managers. Using a sample of 762 earnings forecasts for the period of 2002-2010 I study intraday trading behavior around the forecast announcements. The results indicate that investors take into account the term-structure of managerial incentives when they trade on the announced forecasts. In particular, I find that positive forecast surprises by the managers with larger short-term equity-based compensation are treated as less credible by investors and they sell. Furthermore, the results also show that the biggest source of market's mistrust comes from short-term option grants. The opposite is true for the announcements by the CEOs with larger long-term equity-based compensation i.e. investors buy abnormally more following positive earnings forecasts, specifically when the announcing CEO incentives contain larger long-term stock grants.

Managerial Incentives in an Enterpreneurial [sic] Stock Market Model

Author : Richard Kihlstrom
Publisher :
ISBN 13 :
Total Pages : 27 pages
Book Rating : 4.:/5 (227 download)

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Book Synopsis Managerial Incentives in an Enterpreneurial [sic] Stock Market Model by : Richard Kihlstrom

Download or read book Managerial Incentives in an Enterpreneurial [sic] Stock Market Model written by Richard Kihlstrom and published by . This book was released on 1990 with total page 27 pages. Available in PDF, EPUB and Kindle. Book excerpt:

Feedback Effect of Stock Prices on Fundamental Values

Author : Naveen Khanna
Publisher :
ISBN 13 :
Total Pages : 53 pages
Book Rating : 4.:/5 (129 download)

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Book Synopsis Feedback Effect of Stock Prices on Fundamental Values by : Naveen Khanna

Download or read book Feedback Effect of Stock Prices on Fundamental Values written by Naveen Khanna and published by . This book was released on 2000 with total page 53 pages. Available in PDF, EPUB and Kindle. Book excerpt: In this paper, we attribute a resource allocation role to stock prices. When informed investors possess private information important to a firm's investment decision, they need to transmit it to the firm manager. A natural way to achieve this is by trading in a way that allows the manager to infer their information. However, when their trading patterns affect firm investments, there is an incentive to generate the pattern the manager responds to. For instance, if managers respond favorably to a string of price increases, later investors have an incentive to manipulate prices by buying shares (after observing earlier investors buying) even with unfavorable information. In most models of rational expectations, such price manipulation results in trading losses and can be supported only by imposing market incompleteness or restricted participation. However, with a feedback effect, just giving investors positive inventory leads to potential herding as investors can recoup their trading loss through the value increase of their inventory. Also, price manipulation is value increasing since informed investors generate investment-affecting patterns only when the resulting investment is desirable. However, since prices are martingales, herding in trades does not translate into serial correlation of returns and momentum based profits.

Corporate Fraud Exposed

Author : H. Kent Baker
Publisher : Emerald Group Publishing
ISBN 13 : 1789734193
Total Pages : 323 pages
Book Rating : 4.7/5 (897 download)

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Book Synopsis Corporate Fraud Exposed by : H. Kent Baker

Download or read book Corporate Fraud Exposed written by H. Kent Baker and published by Emerald Group Publishing. This book was released on 2020-10-09 with total page 323 pages. Available in PDF, EPUB and Kindle. Book excerpt: Corporate Fraud Exposed uncovers the motivations and drivers of fraud including agency theory, executive compensation, and organizational culture. It delves into the consequences of fraud for various firm stakeholders, and its spillover effects on other corporations, the political environment, and financial market participants.

The Control of Corporate Europe

Author : Fabrizio Barca
Publisher : OUP Oxford
ISBN 13 : 0191530050
Total Pages : 354 pages
Book Rating : 4.1/5 (915 download)

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Book Synopsis The Control of Corporate Europe by : Fabrizio Barca

Download or read book The Control of Corporate Europe written by Fabrizio Barca and published by OUP Oxford. This book was released on 2001-11-15 with total page 354 pages. Available in PDF, EPUB and Kindle. Book excerpt: Written by an international team of authors, this book provides the first systematic account of the control of corporate Europe based on voting block data disclosed in accordance with the European Union's Large Holdings Directive (88/627/EEC). The study provides detailed information on the voting control of companies listed on the official markets in Austria, Belgium, France, Germany, Italy, the Netherlands, Spain, Sweden, the United Kingdom, and, as a benchmark comparison, the United States. The authors record a high concentration of control of corporations in many European countries with single blockholders frequently controlling more than fifty per cent of corporate votes. In contrast, a majority of UK listed companies have no blockholder owning more than ten per cent of shares, and a majority of US listed companies have no blockholder with more than six per cent of shares. Those chapters devoted to individual countries illustrate how blockholders can use legal devices to leverage their voting power over their cash-flow rights, or how incumbents prevent outsiders from gaining voting control. It is shown that the cultural and linguistic diversity of Europe is (almost) matched by its variety of corporate control arrangements.

The Handbook of the Economics of Corporate Governance

Author : Benjamin Hermalin
Publisher : Elsevier
ISBN 13 : 0444635408
Total Pages : 762 pages
Book Rating : 4.4/5 (446 download)

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Book Synopsis The Handbook of the Economics of Corporate Governance by : Benjamin Hermalin

Download or read book The Handbook of the Economics of Corporate Governance written by Benjamin Hermalin and published by Elsevier. This book was released on 2017-09-18 with total page 762 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Handbook of the Economics of Corporate Governance, Volume One, covers all issues important to economists. It is organized around fundamental principles, whereas multidisciplinary books on corporate governance often concentrate on specific topics. Specific topics include Relevant Theory and Methods, Organizational Economic Models as They Pertain to Governance, Managerial Career Concerns, Assessment & Monitoring, and Signal Jamming, The Institutions and Practice of Governance, The Law and Economics of Governance, Takeovers, Buyouts, and the Market for Control, Executive Compensation, Dominant Shareholders, and more. Providing excellent overviews and summaries of extant research, this book presents advanced students in graduate programs with details and perspectives that other books overlook. Concentrates on underlying principles that change little, even as the empirical literature moves on Helps readers see corporate governance systems as interrelated or even intertwined external (country-level) and internal (firm-level) forces Reviews the methodological tools of the field (theory and empirical), the most relevant models, and the field’s substantive findings, all of which help point the way forward

Handbook Of Financial Econometrics, Mathematics, Statistics, And Machine Learning (In 4 Volumes)

Author : Cheng Few Lee
Publisher : World Scientific
ISBN 13 : 9811202400
Total Pages : 5053 pages
Book Rating : 4.8/5 (112 download)

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Book Synopsis Handbook Of Financial Econometrics, Mathematics, Statistics, And Machine Learning (In 4 Volumes) by : Cheng Few Lee

Download or read book Handbook Of Financial Econometrics, Mathematics, Statistics, And Machine Learning (In 4 Volumes) written by Cheng Few Lee and published by World Scientific. This book was released on 2020-07-30 with total page 5053 pages. Available in PDF, EPUB and Kindle. Book excerpt: This four-volume handbook covers important concepts and tools used in the fields of financial econometrics, mathematics, statistics, and machine learning. Econometric methods have been applied in asset pricing, corporate finance, international finance, options and futures, risk management, and in stress testing for financial institutions. This handbook discusses a variety of econometric methods, including single equation multiple regression, simultaneous equation regression, and panel data analysis, among others. It also covers statistical distributions, such as the binomial and log normal distributions, in light of their applications to portfolio theory and asset management in addition to their use in research regarding options and futures contracts.In both theory and methodology, we need to rely upon mathematics, which includes linear algebra, geometry, differential equations, Stochastic differential equation (Ito calculus), optimization, constrained optimization, and others. These forms of mathematics have been used to derive capital market line, security market line (capital asset pricing model), option pricing model, portfolio analysis, and others.In recent times, an increased importance has been given to computer technology in financial research. Different computer languages and programming techniques are important tools for empirical research in finance. Hence, simulation, machine learning, big data, and financial payments are explored in this handbook.Led by Distinguished Professor Cheng Few Lee from Rutgers University, this multi-volume work integrates theoretical, methodological, and practical issues based on his years of academic and industry experience.