Abstract
This article challenges the results of the ‘classical’ managerial delegation literature, where it is assumed that the weight of the managerial bonus only depends on the owner's will to maximise his own profits. By considering sales (S) (resp. relative profit (RP)) contracts, the received literature has found that (S,S) (resp. (RP,RP)) is the unique pure‐strategy sub‐game perfect Nash equilibrium in a game that contrasts S (resp. RP) with pure profit maximisation (PM). This article shows that none of the previous results may hold when the owner negotiates about managerial compensation with his manager. Copyright © 2016 John Wiley & Sons, Ltd.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
