Pay Convexity, Earnings Manipulation, and Project Continuation
研究董事会利用会计信息做投资决策时，如何设计长期高管薪酬计划，发现更凸的薪酬（如期权）会增加盈余操纵、降低报告质量和投资效率，并分析了最优凸性与操纵程度如何随CEO操纵成本变化。
ABSTRACT This paper studies the optimal design of long-term executive pay plans when boards of directors use accounting information for investment decision-making and executives can take costly actions to manipulate this information. The model predicts that a shift to more convex executive pay plans, such as equity plans that rely more on options and less on stock, is associated with higher levels of manipulation, lower reporting quality, and less efficient investment. When designing the optimal contract, the board trades off these effects with the cost of inducing executive effort. The paper also analyzes how the optimal pay convexity and the equilibrium level of manipulation change when the CEO's opportunistic reporting discretion changes. The model predicts that an increase in the CEO's marginal cost of manipulation increases the optimal level of pay convexity and first increases and then decreases the magnitude of manipulation. JEL Classifications: M12; M41; G31.