The literature on incentive contracting suggests that the optimal performance pay contract depends on a tradeoff between productivity and agency costs. The effect of employee ability on this tradeoff is theoretically ambiguous, as the employee’s private gains (through more sophisticated gaming responses) may exceed the employer’s productive benefits. Similarly, employees’ “adverse learning” abo...

Employee stock ownership (ESO) is often associated with reductions in agency costs because it increases employee satisfaction and attachment to their company aligns the interests of employees those firm. Another stream research argues that ESO may have opposite effect on serves as a management entrenchment tool leads divergence between stakeholders. This paper examines relationship France, whic...