implications of these two contracting frictions for the allocation of control over project choice. The model is developed in the … allocation has to be “bang-bang”) or be shared between the owner-manager and investors. Three applications of the model are then … analyzed: capital budgeting, mergers and acquisitions, and dividends. These applications help square the theory with …

objectives. It is shown that, paradoxically, firm owners allow managers with higher propensity to manipulate the short-term stock … price to push for higher-powered and more short-term focused equity incentives. Such managers also work harder, and …

objectives. It is shown that, paradoxically, firm owners allow managers with higher propensity to manipulate the short‐term stock … price to push for higher powered and more short‐term‐focused equity incentives. Such managers also work harder, and …

wealth concerns, in which a manager's satisfaction with his own compensation depends on the compensation of other managers … to luck provides insurance to managers against a compensation shortfall relative to executive peers during market … fluctuations. When all firms pay for luck, we show that an effort-inducing mechanism exists: managers have additional incentives to …

This paper studies the problem of delegating the allocation of resources across multiple categories to an agent who has … cap on the allocation to each category, a generalization of Holmström's (1977) ‘interval controls' to multidimensional … allocation. Such limits are more likely to be optimal when the conflict is weaker and the agent's information is also on …