Moral Hazard and the Corporate Information Environment

Dan Luo
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Abstract

Much of corporate managers’ incentive is related to the stock price. Consequently, a firm can design its corporate information environment to tackle its manager’s moral hazard problem. We analyze a model in which the manager needs to exert costly effort to implement a risky, long-term project and the project gives the manager opportunities to make credible disclosure. The optimal disclosure to motivate effort is the manager’s strategic disclosure because it protects the manager from the downside of the project and induces the rational stock market to punish nondisclosure. A more transparent information regime is not always preferred because it may reduce the manager’s discretion on disclosure. We also derive the optimal disclosure when both the effort and the project choice are considered.
道德风险与企业信息环境
公司经理的激励在很大程度上与股票价格有关。因此,企业可以通过设计企业信息环境来解决管理者的道德风险问题。我们分析了一个模型,在这个模型中,管理者需要付出昂贵的努力来实施一个有风险的长期项目,而这个项目给了管理者做出可信披露的机会。激励努力的最优披露是管理者的战略披露,因为它保护管理者免受项目不利影响,并诱导理性的股票市场惩罚不披露。更透明的信息制度并不总是可取的,因为它可能会减少管理者在信息披露方面的自由裁量权。我们还推导出了同时考虑工作和项目选择的最优披露。
本文章由计算机程序翻译,如有差异,请以英文原文为准。
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