EARNINGS AND PRICE-BASED COMPENSATION CONTRACTS IN THE PRESENCE OF DISCRETIONARY TRADING AND INCOMPLETE CONTRACTING

Authors
BAIMAN S VERRECCHIA RE
Citation
S. Baiman et Re. Verrecchia, EARNINGS AND PRICE-BASED COMPENSATION CONTRACTS IN THE PRESENCE OF DISCRETIONARY TRADING AND INCOMPLETE CONTRACTING, Journal of accounting & economics, 20(1), 1995, pp. 93-121
Citations number
36
Categorie Soggetti
Business Finance",Economics
Journal title
Journal of accounting & economics → ACNP
ISSN journal
01654101
Volume
20
Issue
1
Year of publication
1995
Pages
93 - 121
Database
ISI
SICI code
0165-4101(1995)20:1<93:EAPCCI>2.0.ZU;2-1
Abstract
The paper analyzes the use of reported accounting earnings and price a s a basis for compensating a manager when he trades on private informa tion, and share price is set rationally based on privately held inform ation, publicly available and contractible information, and publicly a vailable but noncontractible information. In addition, we analyze the comparative statics of the compensation weights on reported earnings a nd price with respect to changes in the economy.