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Learning, termination, and payout policy in dynamic incentive contracts

DeMarzo, Peter M.; Sannikov, Yuliy - 2016

We study a principal-agent setting in which both sides learn about future profitability from output, and the project can be abandoned/terminated if profitability is too low. With learning, shirking by the agent both reduces output and lowers the principal's estimate of future profitability. The...

Persistent link: https://www.econbiz.de/10011864825

Do managers with limited liability take more risky decisions? An information acquisition model

Malcomson, James M. - 2010

Risk-neutral individuals take more risky decisions when they have limited liability. Risk-neutral managers may not when acting as agents under contract and taking costly actions to acquire information before taking decisions. Limited liability makes it optimal to increase the reward for outcomes...

Persistent link: https://www.econbiz.de/10010275809

Mergers, managerial incentives, and efficiencies

Jovanovic, Dragan - 2014 - [rev.]

We analyze the effects of synergies from horizontal mergers in a Cournot oligopoly where principals provide their … agents with incentives to cut marginal costs prior to choosing output. We stress that synergies come at a cost which possibly … order to reduce her agency costs. Whenever this incentive effect dominates the well-known direct synergy effect, synergies …

Persistent link: https://www.econbiz.de/10010360044

Optimale Anreizverträge : Theorie, Vertragsstruktur und beschränkte Haftung

Henze, Frank - 2005

Persistent link: https://www.econbiz.de/10003148681

Merger performance and managerial incentives

Kräkel, Matthias; Müller, Daniel - 2014

the CEO systematically recommends targets with low synergies - even when targets with high synergies are available - to …

Persistent link: https://www.econbiz.de/10011430291

Merger efficiency and managerial incentives

Kräkel, Matthias; Müller, Daniel - 2013

the CEO systematically recommends targets with low synergies' even when targets with high synergies are available' to …

Persistent link: https://www.econbiz.de/10010198514

Separation of ownership and control : delegation as a commitment device

Boukouras, Aristotelis - 2011

This paper provides a theoretical model for explaining the separation of ownership and control in firms. An entrepreneur hires a worker, whose effort is necessary for running a project. The worker's effort determines the probability that the project will be completed on time, but the worker...

Persistent link: https://www.econbiz.de/10010348626

Optimal long-term contracting with learning

He, Zhiguo; Wei, Bin; Yu, Jianfeng; Gao, Feng - 2016

We introduce uncertainty into Holmstrom and Milgrom (1987) to study optimal long-term contracting with learning. In a dynamic relationship, the agent's shirking not only reduces current performance but also increases the agent’s information rent due to the persistent belief manipulation...

Persistent link: https://www.econbiz.de/10011557712

Dynamic contracting with long-term consequences : optimal CEO compensation and turnover

Vasama, Suvi - 2016

We examine optimal managerial compensation and turnover policy in a principal-agent model in which the firm output is serially correlated over time. The model captures a learning-by-doing feature: higher effort by the manager increases the quality of the match between the firm and the manager in...

Persistent link: https://www.econbiz.de/10011550469

Executive Compensation and Earnings Management under Moral Hazard

Sun, Bo - 2013

This paper analyzes executive compensation in a setting where managers may take a costly action to manipulate corporate performance, and whether managers do so is stochastic. We show that an increase in the possibility of manipulation actually calls for executive pay to be more responsive to...

Persistent link: https://www.econbiz.de/10013089812

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