Paying CEOs fat bonuses for stock performance doesn’t work — Cornell study – Yahoo Finan ce

Keeping it fresh! In class I gave an example of how stock options are an imperfect tool to align managerial interest with shareholder interests. Then bam! Here is an article suggesting stock-based bonuses do not work in the sense that 1-, 3-, and 5- year returns are statistically the same with or without the bonuses.

However, knowing how we do it in academia, it is a matter of time before another article finds a significant improvement with bonuses so we can arrive at the good ‘ol “results are mixed.” One day, when I am extremely bored, I would like to study just what and who within a firm have a significant impact on stock returns (positive or negative). Is it top-level management? The chief scientist? The CFO? Patents? Alas, it is the journey not the answer…

http://finance.yahoo.com/news/surprise–paying-ceos-for-stock-performance-doesn-t-help-companies–cornell-183854141.html

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