Bonfiglioli, Alessandra; Gancia, Gino A - C.E.P.R. Discussion Papers - 2011
We study a dynamic model where growth requires both long-term investment and the selection of talented managers. When … ability is not ex-ante observable and contracts are incomplete, managerial selection imposes a cost, as managers facing the … selection and investment that has implications for the choice of contractual relationships. Our analysis shows that rigid long …