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Title: Explaining the Structure of CEO Incentive Pay with Decreasing Relative Risk Aversion
Authors: Chaigneau, Pierre
Keywords: CEO pay
Principal-agent model
Corporate governance
Stock-options
Issue Date: 2012-02
Series/Report no.: Cahiers du CIRPÉE;12-08
Abstract: It is established that the standard principal-agent model cannot explain the structure of commonly used CEO compensation contracts if CRRA preferences are postulated. However, we demonstrate that this model has potentially a high explanatory power with preferences with decreasing relative risk aversion, in the sense that a typical CEO contract is approximately optimal for plausible preference parameters.
URI: https://depot.erudit.org/id/003585dd
Appears in Collections:Cahiers de recherche du CIRPÉE

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