Behavioral Finance – The Manager’s Pay and the Increase in the Value of a Company

Abstract

This article analyses the influence of the compensation model on the managers' actions, which is related to the increase in the value of companies in the long term. The aim, however, is to highlight the need to consider also behavioral paradigm by researchers and shareholders. The following paper presents both a prospect theory proposed by Daniel Kahneman and Amos Tversky and possible application of this approach to the analysis of the managerial pay, as well as a review of research into this field carried out in recent years.