Matching firms, managers and incentives

Oriana Bandiera, Luigi Guiso, Andrea Prat and Raffaella Sadun

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We exploit a unique combination of administrative sources and survey data to study the match between firms and managers. The data includes manager characteristics, such as risk aversion and talent; firm characteristics, such as ownership; detailed measures of managerial practices relative to incentives, dismissals and promotions; and measurable outcomes, for the firm and for the manager. A parsimonious model of matching and incentive provision generates an array of implications that can be tested with our data. Our contribution is twofold. We disentangle the role of risk-aversion and talent in de-termining how firms select and motivate managers. In particular, risk-averse managers are matched with firms whose compensation scheme depends less on performance. We also show that empirical findings linking governance, incentives, and performance that are typically observed in isolation, can instead be interpreted within a simple unified matching framework.

JEL-codes: N0 (search for similar items in EconPapers)
Date: 2015-07
New Economics Papers: this item is included in nep-bec, nep-cfn, nep-ger, nep-hrm, nep-sbm and nep-upt
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (75)

Published in Journal of Labor Economics, July, 2015, 33(3), pp. 623-681. ISSN: 0734-306X

Downloads: (external link)
http://eprints.lse.ac.uk/57271/ Open access version. (application/pdf)

Related works:
Journal Article: Matching Firms, Managers, and Incentives (2015)
Working Paper: Matching Firms, Managers, and Incentives (2012)
Working Paper: Matching firms, managers, and incentives (2012)
Working Paper: Matching Firms, Managers, and Incentives (2011)
Working Paper: Matching Firms, Managers and Incentives (2011)
Working Paper: Matching Firms, Managers, and Incentives (2009)
Working Paper: Matching Firms, Managers, and Incentives (2009)
Working Paper: Matching Firms, Managers and Incentives (2009)
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