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 …

The corporate finance literature documents that managers tend to over-invest in their companies. A number of … between shareholders and managers. The present paper shows that over-investments are not necessarily the (negative …) consequence of agency problems between shareholders and managers, but instead might be a second-best optimal response to address …