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2016-10-26Diskussionpapier DOI: 10.18452/18417
Dynamic Contracting with Long-Term Consequences
dc.contributor.authorVasama, Suvi
dc.date.accessioned2017-09-27T13:23:29Z
dc.date.available2017-09-27T13:23:29Z
dc.date.issued2016-10-26none
dc.identifier.urihttp://edoc.hu-berlin.de/18452/19094
dc.description.abstractWe examine optimal managerial compensation and turnover policy in a principal-agent model in which the firm output is serially correlated over time. The model captures a learning-by-doing feature: higher effort by the manager increases the quality of the match between the firm and the manager in the future. The optimal incentive scheme entails an inefficiently high turnover rate in the early stages of the employment relationship. The optimal turnover probability depends on the past performance and the likelihood of turnover decreases gradually with superior performance. With good enough past performance, the turnover policy reaches efficiency; the manager is never retained if it is inefficient to do so. The manager’s compensation depends on the firm value and the optimal performance-compensation relation increases with past performance.eng
dc.language.isoengnone
dc.publisherHumboldt-Universität zu Berlin
dc.subjectDynamic moral hazardeng
dc.subjectmanagerial turnovereng
dc.subjectpay for performanceeng
dc.subject.ddc330 Wirtschaftnone
dc.titleDynamic Contracting with Long-Term Consequencesnone
dc.typeworkingPaper
dc.subtitleOptimal CEO Compensation and Turnovernone
dc.identifier.urnurn:nbn:de:kobv:11-110-18452/19094-7
dc.identifier.doihttp://dx.doi.org/10.18452/18417
local.edoc.container-titleSonderforschungsbereich 649: Ökonomisches Risikonone
local.edoc.pages30none
local.edoc.type-nameDiskussionpapier
local.edoc.institutionWirtschaftswissenschaftliche Fakultätnone
local.edoc.container-typeseries
local.edoc.container-type-nameSchriftenreihe
local.edoc.container-volume2016
local.edoc.container-issue44
local.edoc.container-erstkatid2195055-6

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