The Impact of Local Politics on the Principal-Agent Relationship Between Council and Manager in Municipal Government
研究了美国市政议会与经理之间的委托代理关系，发现政治环境越紧张，经理合同中解雇保护条款越多，这有助于理解双方初始契约的形成。
A majority of U.S. municipalities now operate under the council-manager form of government, an institutional design that creates a principal-agent problem as the elected council and appointed manager have divergent incentives. While current scholarship on the council-manager relationship focuses on ex post municipal level outcomes, this study advances the literature by developing a theory of ex ante contracting between principal and agent at the local level. The theory predicts that increasingly constraining political environments are associated with a greater degree of contractually provided employment protection for incoming city managers. Using unique data on California municipalities and their managers, empirical analysis supports the theory’s predictions. Specifically, as the municipal electorate becomes more cohesive and less moderate and as municipal elections become increasingly competitive, city manager contracts include increasing protection from termination in the form of severance and political protection from termination. The empirical results suggest that employment protection serves an important role in the initial creation of a principal-agent relationship between manager and council by defining the cost council must bear if they terminate the manager and protecting the manager from career risk.