We test theoretical predictions on when CEOs delegate authority to senior managers in mergers and acquisitions. Using a novel proxy for delegation, we find that CEOs are more likely to delegate when the firm is larger or more complex and are less likely to delegate when they have an...

This paper shows outside directors have an increased chance of obtaining new positions (CEO, COB, directorships) during a CEO turnover year in firms that hire a CEO externally. The new positions are determined by outside directors' CEO hiring source choice (internal or external), not their...

Given that an owner cannot commit to her timing strategy under a manager's hidden action, we consider (i) how the owner's timing decisions to launch a project and to replace the manager or change a project are determined, and (ii) how the optimal compensation contract for the manager is...

For the past 30 years, the conventional wisdom has been that executive compensation packages should include very large proportions of incentive pay. This incentive pay orthodoxy has become so firmly entrenched that the current debates about executive compensation simply take it as a given. We...

The main function of hierarchies is to coordinate activities within an organisation, but a hierarchical structure also provides work incentives, by offering the prospect of hierarchical mobility. An alternative way for organisations to motivate workers is through job design. In organisations...

Using German establishment data, we show that the relationship between intensity of performance pay and intensity of applicant screening depends on the nature of production. In establishments with increased multitasking, performance pay is positively associated with applicant screening. By...

Delegation in hiring (DIH) is becoming a mainstream management practice among business chains worldwide, yet theoretical and empirical evidence of its effects remains scarce. DIH refers to the use of store managers to do their own recruiting, rather than relying on the headquarters human...

We conduct a laboratory experiment to analyze cooperative behavior between a manager and an employee in the presence of misbehavior and protected whistleblowing. Before taking part in a trust game with her employee, a manager has the opportunity to embezzle money at the expense of a third party....

Whose preferences drive labor market sorting? We present a simple model of hiring that illustrates the role of intermediaries, worker preferences and employer preferences. These factors are unaccounted for in traditional resume audit studies, leading to ambiguity about interpretation. We...

Promotions serve two purposes. They ought to provide incentives for employees and to select the best employee for a management position. However, if non-contractible managerial decision rights give rise to private benefits and preference misalignment between managers and the firm, these two...