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dc.contributor.authorDesmettre, S.
dc.contributor.authorGould, John
dc.contributor.authorSzimayer, A.
dc.date.accessioned2017-01-30T13:18:14Z
dc.date.available2017-01-30T13:18:14Z
dc.date.created2011-01-18T20:02:59Z
dc.date.issued2010
dc.identifier.citationDesmettre, Sascha and Gould, John and Szimayer, Alex. 2010. Own-company stockholding and work effort preferences of an unconstrained executive. Mathematical Methods of Operations Research. 72 (3): pp. 347-378.
dc.identifier.urihttp://hdl.handle.net/20.500.11937/30229
dc.identifier.doi10.1007/s00186-010-0322-5
dc.description.abstract

We develop a framework for analyzing an executive's own-company stockholding and work effort preferences. The executive, characterized by risk aversion and work effectiveness parameters, invests his personal wealth without constraint in the financial market, including the stock of his own company whose value he can directly influence with work effort. The executive's utility-maximizing personal investment and work effort strategy is derived in closed form, and a utility indifference rationale is applied to determine his required compensation. Being unconstrained byperformance contracting, the executive's work effort strategy establishes a base case for theoretical or empirical assessment of the benefits or otherwise of constraining executives with performance contracting.

dc.publisherSpringer Berlin Heidelberg
dc.subjectOptimal portfolio choice Executive compensation
dc.titleOwn-company stockholding and work effort preferences of an unconstrained executive
dc.typeJournal Article
dcterms.source.volume72
dcterms.source.startPage347
dcterms.source.endPage378
dcterms.source.issn14322994
dcterms.source.titleMathematical Methods of Operations Research
curtin.note

The original publication is available at : http://www.springerlink.com

curtin.departmentSchool of Economics and Finance
curtin.accessStatusOpen access


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