Matching Firms, Managers and Incentives

Oriana Bandiera, Andrea Prat, Luigi Guiso and Raffaella Sadun

No 16691, NBER Working Papers from National Bureau of Economic Research, Inc

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 determining how firms select and motivate managers. In particular, risk-averse managers are matched with firms that offer low-powered contracts. 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: J24 L2 (search for similar items in EconPapers)
Date: 2011-01
Note: PR
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (18)

Published as Bandiera, Oriana, Luigi Guiso, Andrea Prat, and Raffaella Sadun. "Matching Firms, Managers, and Incentives." Journal of Labor Economics (forthcoming).

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Working Paper: Matching Firms, Managers, and Incentives (2009)
Working Paper: Matching Firms, Managers and Incentives (2009)
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