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Unformatted text preview: o Do we get strategic default? Entrepreneurs not paying for what they owe, even if they may do so o Companies must report information to SEC Two Models of Corporate pay: o Perks substitute for salary o Perks increase if the ownership is lower Run a regression: cost of ceos private plane o Variables: CEOs salary and CEOs shares o Cost of CEOs plane= a-b(Ceo salary)-c(% owned by CEO) + d (other variables) o If big negative for B= theory B rules, if big negative for C=theory A rules o B=-.001 ==says that extra salary does not have a severe change on the cost of the ceos plane==no on theory B o C= low as well, no support for either...
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