Both countries and subnational governments commonly engage in competition for mobile capital, offering generous location incentives to attract investment. The use of tax incentives is a paradox, whereby fiscally strained governments offer lucrative tax treatment to firms, yet the economics...

This study provides evidence that managerial incentives, shaped by compensation contracts, help to explain the empirical relationship between uncertainty and investment. We develop a model in which the manager, compensated with an equity-based contract, makes investment decisions for a firm that...

Traditional finance theory suggests that riskier investments should yield higher returns. Challenging this notion, anecdotal and empirical evidence suggests that highly-incented managers may take on excessive risk, leading to greater losses, while other theoretical research argues that high...