We study managerial incentive provision under moral hazard in an environment where growth opportunities arrive stochastically over time and taking them requires a change of management. The firm faces a trade-off between the benefit of always having a manager able to seize new opportunities and...

We study the problem of an investor that buys an equity stake in an entrepreneurial venture, under the assumption that the former cannot monitor the latter's operations. The dynamics implied by the optimal incentive scheme is rich and quite different from that induced by other models of repeated...

We study the problem of an investor that buys an equity stake in an entrepreneurial venture, under the assumption that the former cannot monitor the latter’s operations. The dynamics implied by the optimal incentive scheme is rich and quite different from that induced by other models of...

We study the problem of an investor that buys an equity stake in an entrepreneurial venture, under the assumption that the former cannot monitor the latter’s operations. The dynamics implied by the optimal incentive scheme is rich and quite different from that induced by other models of...

We present a dynamic general equilibrium model with heterogeneous firms. Owners of the firms delegate investment decisions to managers, whose consumption and investment are private information. We solve the optimal incentive compatible contracts and characterize the implied firm dynamics....

We take advantage of comprehensive panel data available as a result of the 2006 SEC disclosure rules on relative performance evaluation (RPE) to (i) better understand how firms choose performance peer groups used in CEO RPE contracts and (ii) to investigate the causal impact of mandatory...

This paper reviews agency theory and its application to accounting issues. I discuss the formulation of models of incentive problems caused by moral hazard and adverse selection problems. I review theoretical research on the role of performance measures in compensation contracts, and I compare...

This paper studies the relation between managerial power, the manager's compensation contract, and firm performance when the manager's contract comprises a stock-based pay and a fixed salary. When there is no cap on the manager's salary, the size of the manager's stock-based compensation is the...