How do firms, managers and incentives match up?

The journal article by Oriana Bandiera, Luigi Guiso, Andrea Prat, and Raffaella Sadun, combines unique administrative and survey data to study the match between firms and managers. The model illustrates how risk aversion and talent determine how firms select and motivate managers. Professor Andrea Prat and co-authors show that empirical links between firm governance, incentives, and performance, which have so far been studied in isolation, can instead all be interpreted within our simple unified matching framework.