Economics at your fingertips  

Implicit Contracts, Managerial Incentives, and Financial Structure

Roberta Dessi

Journal of Economics & Management Strategy, 2001, vol. 10, issue 3, 359-390

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. The required form of outside intervention can be implemented through a financial structure combining hard debt with a dispersed ownership structure. Copyright (c) 2001 Massachusetts Institute of Technology.

Date: 2001
References: Add references at CitEc
Citations: View citations in EconPapers (2) Track citations by RSS feed

Downloads: (external link) ... &year=2001&part=null link to full text (text/html)
Access to full text is restricted to subscribers.

Related works:
Working Paper: Implicit Contracts, Managerial Incentives and Financial Structure (1997) Downloads
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link:

Ordering information: This journal article can be ordered from
http://www.blackwell ... ref=1058-6407&site=1

Access Statistics for this article

More articles in Journal of Economics & Management Strategy from Wiley Blackwell
Bibliographic data for series maintained by Wiley Content Delivery ().

Page updated 2020-02-20
Handle: RePEc:bla:jemstr:v:10:y:2001:i:3:p:359-390