still benefits from the increase in the merged firm's total value. Moreover, given that the managers are compensated … according to an identical linear incentive scheme, the optimal shareholder policy always entails a corner solution. Managers …

misalignment between managers and the firm, these two purposes are in conflict. This is because the worker with the largest private …: employees that create lower expected profits as managers have yet better promotion prospects. That finding still holds when the … firm owner optimally chooses the promotion rule, the degree of delegation, and wage payments to both employees and managers …