FRIC/Finance seminar with Sebastian Gryglewicz, Erasmus University Rotterdam
The Department of Finance and FRIC, Center for Financial Frictions, are proud to announce the upcoming seminar with Sebastian Gryglewicz, Erasmus University Rotterdam.
Sebastian Gryglewicz will present:
We study a continuous-time agency model in which a principal invests in a firm run by a manager and monitored by an intermediary. Both the manager and the intermediary are subject to moral hazard. We analyze two different contracting settings that differ by the type of intermediation. In delegated monitoring, the principal can provide the optimal level of incentives to both the intermediary and the manager. In delegated contracting, the principal offers a contract only to the intermediary, who in turn designs a contract for the manager. Optimal incentives are qualitatively different across the two cases. Whereas a strong performance shifts incentives from the manager to the intermediary under delegated monitoring, it increases incentives for both agents under delegated contracting. Agency conflicts at the intermediary level lead to an overprovision of managerial incentives under delegated monitoring and an underprovision of managerial incentives under delegated contracting.
Solbjerg Plads 3,