We model a multidivisional firm as a three-tier economic organization. The larger the number of divisions, the lower is the owner's capacity to monitor delegated managers. We show how resultant misaligned managerial incentives can translate into differences in employee incentive schemes between...

We study the pay of UK universities chief executives ("vice-chancellors") over a ten year period. Although there is a correlation between pay and performance, with better performing institutions paying higher salaries, we find limited evidence that this relationship is causal; that is, we find...