It is often claimed that (i) managers work too hard on operational issues and do not spend enough effort on strategic …

distribution - mean and volatility - along an efficient frontier. Assuming that managers differ with respect to their marginal cost … of effort and their risk aversion we explore our model's comparative statics predictions in full detail. If managers … profits, and incentives is the natural outcome. Allowing in addition for adverse selection with respect to the managers …

contracts which determine their managers' salaries. One contract simply gives managers incentives to maximize firm profits …, while the second contract gives an additional sales bonus. Although theory predicts the second contract to be chosen, it is … only rarely chosen in the experimental markets. This behavior is rational given that managers do not play according to the …

"Stock-based compensation is the standard solution to agency problems between shareholders and managers. In a dynamic … managers to work harder, it also induces them to hide any worsening of the firm's investment opportunities by following largely …-valued while managers hide the bad news to shareholders. We find that a firm-specific compensation package based on both stock and …