<title>Abstract</title> <italic>Fair employment policies constrain employee selection: specifically, applicants’ professional experience can be a substitute for formal education. However, reflecting firm-specific job requirements, this substitution rule applies less strictly to applicants from outside the firm....</italic>

We analyze a Tullock-type takeover contest between two CEOs. To deter wasteful influence activities in shareholder optimum, the parachute compensates the (potentially) foregone earnings of the contestant whose incentives to invest in such activities are strongest. Therefore, the parachute is...

The O-ring theory is used to analyze the emergence of firms organized as partnerships. The owner-managers of such entrepreneurial firms benefit from ability matching within their production teams. However, they must bear the project risk. Risk aversion then induces a second-best solution....