Dynamic multitasking and managerial investment incentives

• 成果类型: Article
• 署名作者: Hoffmann, Florian; Pfeil, Sebastian
• 署名单位: KU Leuven; Erasmus University Rotterdam; Erasmus University Rotterdam - Excl Erasmus MC
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2021.06.027
• 发表日期: 2021
• 页码: 954-974
• 关键词: Continuous time contracting; Multiple tasks; Delegated investment; Managerial compensation; INVESTMENT DYNAMICS

摘要

We study non-contractible intangible investment in a dynamic agency model with mul-titasking. The manager's short-term task determines current performance, which deteri-orates with investment in the firm's future profitability, his long-term task. The optimal contract dynamically balances incentives for short-and long-term performance. Invest-ment is distorted upwards (downwards) relative to first-best in firms with high (low) re-turns to investment. These distortions decrease as good performance relaxes endogenous financial constraints, implying negative (positive) investment-cash flow sensitivities. Our results shed light on how corporate investment policies, liquidity management, and exec-utive compensation structure differ across industries with different returns to intangible investment. (c) 2021 Elsevier B.V. All rights reserved.