Managerial Bargaining Power in the Determination of Compensation Contracts and Corporate Investment
用机制设计模型分析管理层议价能力如何影响薪酬合同设计，进而影响公司投资和管理层努力。议价能力弱时合同偏向激励努力，强时则偏向增加资本投资。
This paper considers the design of managerial compensation contracts and their impact on corporate investment decisions and the managerial effort decision. The model relates the compensation scheme to outside share ownership and managerial bargaining position. Using the methods of mechanism design under asymmetric information, a shift in favor of effort is documented in the case where managerial bargaining strength is weak, while a shift toward more use of capital investment results from strong managerial bargaining power. The model distinguishes managerial equity holdings from contingent compensation contracts. Our results are related to the empirical literature on pay‐performance sensitivities.