Arbeitspapier
Managerial incentive problems and return distributions
We study a model of managerial incentive problems where a manager chooses the first two moments of his firm's profit distribution - mean and volatility - along an efficient frontier. Assuming that managers differ with respect to their marginal cost of effort and their risk aversion we explore our model's comparative statics predictions in full detail. If managers' preference parameters are commonly known and associated, then a positive correlation between expected returns, volatility of profits, and incentives is the natural outcome. Allowing in addition for adverse selection with respect to the managers' preference parameters does not change the predicted correlation if the variation in observed contracts is not too large. Moreover, observed incentive schemes reflect exclusion of some manager types. Neglecting the endogeneity of risk in empirical studies biases estimates towards zero.
- Sprache
-
Englisch
- Erschienen in
-
Series: SFB/TR 15 Discussion Paper ; No. 486
- Klassifikation
-
Wirtschaft
Asymmetric and Private Information; Mechanism Design
Compensation Packages; Payment Methods
- Thema
-
managerial incentive problems
comparative statics
multidimensional heterogeneity
multidimensional screening
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Szalay, Dezsö
Yokeeswaran, Venuga
- Ereignis
-
Veröffentlichung
- (wer)
-
Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
- (wo)
-
München
- (wann)
-
2014
- DOI
-
doi:10.5282/ubm/epub.22182
- Handle
- URN
-
urn:nbn:de:bvb:19-epub-22182-0
- Letzte Aktualisierung
-
10.03.2025, 11:41 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Szalay, Dezsö
- Yokeeswaran, Venuga
- Sonderforschungsbereich/Transregio 15 - Governance and the Efficiency of Economic Systems (GESY)
Entstanden
- 2014
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