Executive Compensation and Aggregate Bankruptcy Risk

Our project has three major components. First, we will utilize nonparametric methods to assess the weight of different factors in determining compensation. These factors include political issues, efficient contracting and CEO power. Second, we will develo p a theoretical model based on decision theory, to tease out a structural model of CEO compensation. Third, we will estimate the link between bankruptcy risk and CEO pay. Finally, we will involve in outreach and dissemination via research exchange, confe rences and workshops, in order to publish papers and bring researchers to Norway. At the end of our project, we will have gained considerable knowledge about the role of risk and compensation in financial markets.