Matching Firms, Managers and Incentives

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dc.contributor.author BANDIERA, Oriana
dc.contributor.author GUISO, Luigi
dc.contributor.author PRAT, Andrea
dc.contributor.author SADUN, Raffaella
dc.date.accessioned 2009-03-02T15:28:02Z
dc.date.available 2009-03-02T15:28:02Z
dc.date.issued 2008
dc.identifier.issn 1725-6704
dc.identifier.uri http://hdl.handle.net/1814/10767
dc.description.abstract We provide evidence on the match between firms, managers and incentives using a new survey designed for this purpose. The survey contains information on a sample of executives’ risk preferences and human capital, on the explicit and implicit incentives they face and on the firms they work for. We model a market for managerial talent where both firms and managers are heterogeneous. Following the sources of heterogeneity observed in the data, we assume that firms differ by ownership structure and that family firms, though caring about profits, put relatively more weight on benefits of direct control than non-family firms. Managers differ in their degree of risk aversion and talent. The entry of firms and managers, the choice of managerial compensation schemes and the manager firm matching are all endogenous. The model yields predictions on several equilibrium correlations that find support in our data: (i) Family firms use managerial contracts that are less sensitive to performance, both explicitly through bonus pay and implicitly through career development; (ii) More talented and risk-tolerant managers are matched with firms that offer steeper contracts. (iii) Managers who face steeper contracts work harder, earn more and display higher job satisfaction. Alternative explanations may account for some of these correlations but not for all of them jointly. en
dc.language.iso en en
dc.publisher European University Institute
dc.relation.ispartofseries EUI ECO en
dc.relation.ispartofseries 2009/14 en
dc.subject managerial incentives en
dc.subject matching en
dc.subject firm performance en
dc.subject family firms en
dc.title Matching Firms, Managers and Incentives en
dc.type Working Paper en
dc.neeo.contributor BANDIERA|Oriana|aut|
dc.neeo.contributor GUISO|Luigi|aut|EUI70005
dc.neeo.contributor PRAT|Andrea|aut|
dc.neeo.contributor SADUN|Raffaella|aut|
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