The unicorn quest: Deriving empirical predictions from theory

Anne Beyer and Junyoung Jeong

Journal of Accounting and Economics, 2024, vol. 78, issue 2

Abstract: We discuss Feng et al. (2024), which studies a dynamic model of delegated investment. The paper provides novel insights into the optimal contract between a principal and an agent who obtains private information about both the timing and profitability of investment opportunities. While the analytical analysis provides interesting findings, we have concerns about the validity of the paper’s empirical predictions. We extend the “conceptual” and “operational” levels of Libby boxes by adding an “analytical” level to offer a tool for assessing and developing the link between theoretical models and empirical tests.

Keywords: Delegated investment decision; Dynamic contracting; Adverse selection (search for similar items in EconPapers)
JEL-codes: D82 M11 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:jaecon:v:78:y:2024:i:2:s0165410124000661

DOI: 10.1016/j.jacceco.2024.101736

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