Codes of Best Practice in Competitive Markets for Managers

Eduard Alonso-Paulí and David Pérez-Castrillo
Authors registered in the RePEc Author Service: Eduard Alonso-Pauli () and David Perez-Castrillo

No 330, Working Papers from Barcelona School of Economics

Abstract: We study firms' corporate governance in environments where possibly heterogeneous shareholders compete for possibly heterogeneous managers. A firm, formed by a shareholder and a manager, can sign either an incentive contract or a contract including a Code of Best Practice. A Code allows for better managerial control but makes manager's decisions hard to react when market conditions change. It tends to be adopted in markets with low volatility and in low-competitive environments. The firms with the best projects tend to adopt the Code when managers are nottoo heterogeneous while the best managers tend to be hired through incentive contracts when the projects are similar. Although the matching between shareholders and managers is often positively assortative, the shareholders with the best projects might be willing to renounce to hire the best managers, signing contracts including Codes with lower-ability managers.

Keywords: G-34; D-82 (search for similar items in EconPapers)
Date: 2015-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
https://bw.bse.eu/wp-content/uploads/2022/03/1330-file.pdf (application/pdf)

Related works:
Journal Article: Codes of Best Practice in competitive markets for managers (2012)
Working Paper: Codes of Best Practice in Competitive Markets for Managers (2008)
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: https://EconPapers.repec.org/RePEc:bge:wpaper:330

Access Statistics for this paper

More papers in Working Papers from Barcelona School of Economics Contact information at EDIRC.
Bibliographic data for series maintained by Bruno Guallar ().