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| Author: | Jeon, S. |
| Title: | Reputational concerns and managerial incentives in investment decisions |
| Journal: | European Economic Review
1998 : JUL, VOL. 42:7, p. 1203-1219 |
| Index terms: | REPUTATION INCENTIVES MANAGEMENT DECISION MAKING INVESTMENTS |
| Language: | eng |
| Abstract: | In the paper, managerial incentives are considered in connection with investment decisions. There is a model used. It is shown that in spot market equilibria, the manager disregards informative signals in early periods of his career. It is found that for a risk-neutral manager, wage guarantees may implement an efficient investment rule. For a risk-averse manager, the optimal contract must trade off investment efficiency for intertemporal consumption-smoothing and risk-sharing. |
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