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Towards the end of any long-term incentive program for CEOs, the short term awaits – but it doesn’t need to be bad news

Xu, Moqi (2014) Towards the end of any long-term incentive program for CEOs, the short term awaits – but it doesn’t need to be bad news. USApp– American Politics and Policy Blog (17 Nov 2014). Blog Entry.

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Abstract

After the financial crisis, shareholders and regulators have become increasingly concerned about short-term pressures in business decision-making. Moqi Xu examines two potential remedies that firms use to set long-term incentives and what happens when they eventually run out. When long-term compensation eventually becomes available to executives, it rewards them for extremely short-term behaviour, such as timing news releases for their own personal benefit. When long-term employment contracts come close to the renewal decision, by contrast, executives are exposed to the scrutiny of the board, which forces them to focus and commercialize long-term investments previously made.

Item Type: Online resource (Blog Entry)
Official URL: http://blogs.lse.ac.uk/usappblog/
Additional Information: © 2014 The Author, USApp– American Politics and Policy Blog, The London School of Economics and Political Science; Online
Divisions: Finance
Financial Markets Group
Subjects: H Social Sciences > HB Economic Theory
H Social Sciences > HD Industries. Land use. Labor > HD28 Management. Industrial Management
JEL classification: M - Business Administration and Business Economics; Marketing; Accounting > M5 - Personnel Economics > M52 - Compensation and Compensation Methods and Their Effects (stock options, fringe benefits, incentives, family support programs, seniority issues)
Sets: Departments > Finance
Research centres and groups > Financial Markets Group (FMG)
Collections > LSE American Politics and Policy (USAPP) Blog
Date Deposited: 03 Dec 2014 16:06
Last Modified: 27 May 2019 23:15
URI: http://eprints.lse.ac.uk/id/eprint/60434

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