- Series Information
- The Oxford Handbook of Economic and Institutional Transparency
- List of Figures and Tables
- List of Contributors
- The Multifaceted Concept of Transparency
- Constitutional Transparency
- Monetary Policy Transparency
- Fiscal Policy Transparency
- Transparent and Unique Sovereign Default Risk Assessment
- Transparency and Competition Policy in an Imperfectly Competitive World
- Transparency in International Trade Policy
- Transparency of Climate Change Policies, Markets, and Corporate Practices
- Transparency of Human Resource Policy
- Transparency of Innovation Policy
- Labor Market Transparency
- Transparency of Financial Regulation
- Price Transparency and Market Integration
- Transparency and Inward Investment Incentives
- Transparency and Corruption
- Multinational Corporations’ Relationship with Political Actors: Transparency versus Opacity
- Corporate Governance and Optimal Transparency
- Transparency Differences at the Top of the Organization: Market-Pull versus Strategic Hoarding Forces
- Governance Transparency and the Institutions of Capitalism: Implications for Finance
- Transparency and Executive Compensation
- Transparency and Disclosure in the Global Microfinance Industry
- Accounting Transparency and International Standard Setting
- Transparency of Fair Value Accounting and Tax
- Transparency of Corporate Risk Management and Performance
- Stress Testing, Transparency, and Uncertainty in European Banking: What Impacts?
- Author Index
- Subject Index
Abstract and Keywords
There are two major types of agency problems: adverse selection and moral hazard. Changing the transparency of executive compensation is one solution to reducing the two agency problems. I define transparency as any mechanism that reduces the information asymmetry between executives and investors. In this chapter, I discuss how executive compensation is structured, and discuss major regulations that have affected compensation. Finally, I examine how increasing the transparency of these schemes affects the pay level and performance relationship to the executives and how executives modify their behavior to affect transparency as a result of their pay structure.
Raghavendra Rau, Sir Evelyn de Rothschild Professor of Finance at Judge Business School at University of Cambridge, Cambridge, UK.
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