shareholders and managers in which managers have private benefits or private costs of investment. Managers overinvest when they …, in isolation, is insufficient to identify whether managers have private benefits or private costs of investment. In order … to identify whether managers have private benefits or costs, we estimate the joint relationships between incentives and …

executive officers. However, firms are run by teams of managers, and a theory of the firm should also explain the distribution …

. We derive the optimal compensation contracts for managers and demonstrate that the use of high-powered incentives will be … limited by the need to soften product market competition. In particular, when managers can be compensated based on their own …