Bisin, Alberto; Gottardi, Piero; Rampini, Adriano A. - CESifo - 2004
the risk in his compensation. In particular, shareholders can monitor the manager’s portfolio stochastically, and since …. This correlation exposes managers to risk and hence gives them an incentive to hedge against the poor performance of their … firms. We study the agency problem between shareholders and a manager when the manager can hedge his incentive compensation …