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What is Managerial Incentives and Firm Investment about?

This study examines how managerial incentives from compensation impact investment decisions and firm performance. The researchers develop a principal-agent model to test two hypotheses: 1) managers overinvest due to private benefits from controlling assets, or 2) managers underinvest due to private costs of overseeing investment. The model predicts that investment and performance will both increase or decrease with incentives under private costs, but move in opposite directions under private benefits. Empir

Author

Ni Khan

Language

EN