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Optimal managerial remuneration and firm-level diversification

Nier, Erlend (1997) Optimal managerial remuneration and firm-level diversification. Financial Markets Group Discussion Papers (269). Financial Markets Group, The London School of Economics and Political Science, London, UK.

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In a model that exhibits both moral hazard and hidden information on the part of the manager different remuneration schemes are discussed and the optimal contract between financial investor and manager is derived. Assuming the manager is risk-neutral and protected by limited liability, a benefit from diversification is shown to exist even though the projects which the manager develops are technologically unrelated and choices made on one project do not constrain the choices on any other project.

Item Type: Monograph (Discussion Paper)
Official URL:
Additional Information: © 1997 The Author(s)
Divisions: Financial Markets Group
Subjects: H Social Sciences > HC Economic History and Conditions
H Social Sciences > HG Finance
JEL classification: D - Microeconomics > D8 - Information, Knowledge, and Uncertainty > D82 - Asymmetric and Private Information
G - Financial Economics > G3 - Corporate Finance and Governance > G31 - Capital Budgeting; Fixed Investment and Inventory Studies
G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
Date Deposited: 22 May 2023 15:42
Last Modified: 16 Sep 2023 00:03

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