We analyze the choice between a one-tier and a two-tier board structure in a firm with a large shareholder sitting on the board. The board has two tasks: project selection and monitoring the ability of the manager. In a one-tier structure, the sole board performs all tasks. In a two-tier...

Stock option contracts provide managers with dual incentives, motivating both effort and fraud. We show that although there exists an infinity of stock option contracts that induce a given level of effort, no contract behaviorally dominates another in the sense that it induces relatively greater...

This research explores whether management by family members creates or destroys firm value. We estimate the impact of family pervasiveness in top management (family members as executive officers or board members) on firm value as measured by Tobin's Q. Results indicate that family members acting...

In a repeated interaction between a principal and two agents with inter-agents externalities and asymmetric information, we show that optimal decentralization within the organization is limited to the first period and across agents.

We investigate the reasons why universities use different combinations of fees and exams to guide admission decisions, focusing on the role of borrowing constraints on such decisions. On the one hand, we show that public universities choose exams and zero fees under borrowing constraints because...

We investigate the reasons why universities use different combinations of fees and exams to guide admission decisions, focusing on the role of borrowing constraints on such decisions. On the one hand, we show that public universities choose exams and zero fees under borrowing constraints because...

Theoretical and empirical evidence is presented to show that inefficient power firms in China are subsidised by the state through the ability to charge high electricity prices and the creation of a “soft price constraint†on costs. This cost inefficiency challenges the merits of...

This paper investigates optimal licensing in a mixed oligopoly with a foreign firm. It is the first to compare licensing by means of a fixed fee and by means of a royalty when the innovator is a public firm. In contrast to a private oligopoly, we show that license via a fixed fee is superior to...

The creation of an innovation niche depends on the interaction of three mechanisms involving: converging expectations, adequate level of individual and network power and efficient knowledge creation and diffusion (Lopolito and Morone, 2010). Such mechanisms define the key characteristics of a...

For a sample of Shanghai firms, we find that while larger firms pay lower wages, managers in larger firms still receive higher wages. There are two reasons for this result. The wage gap between managers and non-managers is positively correlated with firm size and larger firms have a lower...