期刊名称：Economics Discussion Papers / Department of Economics, College of Management and Economics, University of Guelph
出版年度：2006
卷号：2006
出版社：University of Guelph
摘要：We analyze a model with two-dimensional asymmetric information
where the employer has better information about the Örmís earnings
potential and the employee is subject to moral hazard. The employeeís
contract consists of an annual bonus and stock options. We focus on
two issues: how di§erent degrees of asymmetric information about
short-term earnings versus long-term earnings a§ect optimal contracts
and second, if a signalling equilibrium exists, what information con-
cerning the Örmís performance proÖle over time can be conveyed by
the choice of contract. We show that if the extent of long-term (short-
term) asymmetric information is larger, short-term (long-term) com-
pensation prevails. With regard to signalling, we show that Örms
o§ering more options have higher short-term performance and lower
long-term performance. This provides new insights into the structure
of earnings-based compensation.
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