Incentive Contracts, Market Risk, and Cost of Capital
研究了激励合同是否应让代理人承担市场风险，发现市场风险无法从薪酬中过滤，但总体上代理问题不直接影响资本成本。
Abstract Should incentive contracts expose the agent to market‐wide shocks? Counterintuitively, I show that market risk cannot be filtered out from the compensation and managed independently by the agent. Under plausible risk preferences, the principal should offer a contract in which performance pay increases following a favorable market shock. In the aggregate, however, the effect of market risk on individual contracts diversifies away and the agency problem does not directly affect the cost of capital. The analysis suggests caution in interpreting changes in cost of capital in terms of the stewardship role of accounting information.