CARLIN, BRUCE IAN; GERVAIS, SIMON - In: Journal of Finance 64 (2009) 2, pp. 785-821
We analyze how the work ethic of managers impacts a firm's employment contracts, riskiness, growth potential, and organizational structure. Flat contracts are optimal for diligent managers because they reduce risk-sharing costs, but they attract egoistic agents who shirk and unskilled agents who...