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Matching Firms, Managers, and Incentives

Oriana Bandiera, Luigi Guiso, Andrea Prat and Raffaella Sadun

No 10-073, Harvard Business School Working Papers from Harvard Business School

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.

Pages: 59 pages
Date: 2010-02, Revised 2011-08
New Economics Papers: this item is included in nep-bec, nep-cta, nep-dge and nep-lab
References: Add references at CitEc
Citations: View citations in EconPapers (29)

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http://www.hbs.edu/research/pdf/10-073.pdf (application/pdf)

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