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| Author: | DessÃ, R. |
| Title: | Implicit contracts, managerial incentives, and financial structure |
| Journal: | Journal of Economics and Management Strategy
2001 : FALL, VOL. 10:3, p. 359-390 |
| Index terms: | CONTRACTS FINANCIAL STRUCTURE INCENTIVES MANAGERIAL ACTIVITIES |
| Language: | eng |
| Abstract: | This paper examines how managers may be given incentives to exert effort, and to implement efficient implicit contracts with workers. Under certain assumptions, this can be achieved by tying managerial compensation to shareholder value. However, if reputation effects are weak, it is more efficient to adopt an incentive scheme in which the manager is punished by outside investor intervention when performance falls below a critical level, and otherwise retains control, receiving a fixed reward. |
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