Motivating Entrepreneurial Activity in a Firm

• 成果类型: Article
• 署名作者: Bernardo, Antonio E.; Cai, Hongbin; Luo, Jiang
• 署名单位: University of California System; University of California Los Angeles; Peking University; Peking University; Nanyang Technological University
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhn029
• 发表日期: 2009
• 页码: 1089
• 关键词: VENTURE CAPITAL CONTRACTS; inefficient investment; moral hazard; COMPENSATION; INFORMATION; incentives; management; reputation; INNOVATION; MARKETS

摘要

We examine the problem of motivating privately informed managers to engage in entrepreneurial activity to improve the quality of the firm's investment opportunities. The firm's investment and compensation policy must balance the manager's incentives to provide entrepreneurial effort and to report private information truthfully. The optimal policy is to underinvest (compared to first-best) and provide weak incentive pay in low-quality projects and overinvest (compared to first-best) and provide strong incentive pay in high-quality projects.