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Operating efficiency and output insensitive employment contracts for capital management

Abstract:

This paper considers a problem in which an agent is hired to manage a capital investment and subsequently receives private information regarding the productivity of the capital investment. The capital manager must decide whether to invest capital supplied by the firm (the principal), or to divert these investment funds to perquisite consumption. If the manager decides to invest, the manager must then select the level of operating efficiency (productivity) of the capital investment, this latte...

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Authors


Thomas Noe More by this author
Publication date:
1995
URN:
uuid:8b75042d-84e3-4eac-bd04-95e2f3027413
Local pid:
oai:eureka.sbs.ox.ac.uk:1143

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