Shareholder heterogeneity, asymmetric information, and the equilibrium manager

Milo Bianchi, Rose-Anne Dana () and Elyès Jouini ()
Additional contact information
Rose-Anne Dana: Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres, CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique
Elyès Jouini: PJSE - Paris Jourdan Sciences Economiques - UP1 - Université Paris 1 Panthéon-Sorbonne - ENS-PSL - École normale supérieure - Paris - PSL - Université Paris Sciences et Lettres - EHESS - École des hautes études en sciences sociales - ENPC - École nationale des ponts et chaussées - CNRS - Centre National de la Recherche Scientifique - INRAE - Institut National de Recherche pour l’Agriculture, l’Alimentation et l’Environnement, CEREMADE - CEntre de REcherches en MAthématiques de la DEcision - Université Paris Dauphine-PSL - PSL - Université Paris Sciences et Lettres - CNRS - Centre National de la Recherche Scientifique

Post-Print from HAL

Abstract: Consider a firm owned by shareholders with heterogeneous beliefs and discount rates who delegate to a manager the choice of a production plan. The shareholders and the manager can trade contingent claims in a complete asset market. Shareholders cannot observe the chosen production plan and design a compensation scheme so that at equilibrium the manager chooses the plan they prefer and reveals it truthfully. We show that at equilibrium (i) profit is maximized, (ii) the manager gets a constant share of production, (iii) she has no incentive to trade. We then show that such equilibrium exists if and only if the manager has the same belief and discount rate as the representative shareholder. This allows us to characterize the required characteristics of the manager as a function of shareholders' characteristics.

Keywords: Heterogeneous shareholders; Asymmetric information; Manager-shareholders equilibrium (search for similar items in EconPapers)
Date: 2022-06
References: Add references at CitEc
Citations: View citations in EconPapers (1)

Published in Economic Theory, 2022, 73 (4), pp.1101-1134. ⟨10.1007/s00199-021-01349-6⟩

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
Journal Article: Shareholder heterogeneity, asymmetric information, and the equilibrium manager (2022)
Working Paper: Shareholder heterogeneity, asymmetric information, and the equilibrium manager (2022)
Working Paper: Shareholder heterogeneity, asymmetric information, and the equilibrium manager (2021)
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:hal:journl:halshs-03839938

DOI: 10.1007/s00199-021-01349-6

Access Statistics for this paper

More papers in Post-Print from HAL
Bibliographic data for series maintained by CCSD ().