Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/154989
Authors: 
Spagnolo, Giancarlo
Year of Publication: 
1999
Series/Report no.: 
Nota di Lavoro, Fondazione Eni Enrico Mattei 35.1999
Abstract: 
This paper shows that as long as the stock market has perfect foresight, some dividends are distributed, and incentives are paid more than once or are deferred, stock-related compensation packages are strong incentives for managers to support tacit collusive agreements in repeated oligopolies. The stock market anticipates the losses from punishment phases and discounts them on stock prices, reducing managers' short-run gains from any deviation. When deferred, stock-related incentives may remove all managers' short-run gains from deviation making collusion supportable at any discount factor. The results hold with managerial contracts of any length.
Subjects: 
CEO Compensation
Delegation
Collusion
Oligopoly
Managerial incentives
Ownership and control
Corporate governance
JEL: 
D43
G30
J33
L13
L21
Document Type: 
Working Paper

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