This paper develops and tests a structural investment model nesting the Q theory and ...ve distortions: contract-induced CEO myopia, empire building, shirking, debt overhang, and ‡otation costs. Supporting the empire building hypothesis, founders’ (non-founders’) investment is consistent with their deriving an annual bene...t of $3.30 ($0.40) per $1000 of capital. Evidence of contract-induced m...