This paper analyzes a model of moral hazard in portfolio management. Managers wish to earn the higher fees associated with active management but are averse to the effort of identifying superior trading strategies through research. Previous research has focused on contracts which offer explicit incentives. In this paper I address optimal contracting between an investor and a portfolio manager wh...

In this paper, we explore how contract structure is influenced by relational capabilities developed in cross-boundary innovation-based relationships. Differing from other studies, we focus on the organizational positions, roles, and responsibilities of the parties involved. We hypothesize that as technical personnel gain contracting experience with an exchange partner, their focus on value crea...

The unprecedented advancement of the internet is complementing and even replacing the traditional commerce transactions. While face-to-face merchant agreements and paper-based contracts have always been the mechanism for facilitating business transactions nowadays web contracting is introducing a business environment where web contracts are in digital form, are created in a global electronic ma...

The traditional mode of contract analysis assumes a world in which contracting parties choose, from among the universe linguistic formulations, precise terms that express combination rights and duties will maximize their expected joint welfare. Since know what returns contracting, they appropriate document both binds them communicates intentions to courts. In this version world, there is no nee...

We investigate whether cultural differences between professional decision-makers affect financial contracts in a large dataset of international syndicated bank loans. We find that lead banks offer smaller loans at a higher interest rate to more culturally distant borrowers. Furthermore, lead banks are more likely to require third-party guarantees as cultural distance with the borrower increases...

Business transactions are governed by legally established contracts. Contractual obligations are to be fulfilled by executing business processes of the involved parties. To enable this, contract terms and conditions need to be semantically mapped to process concepts and then analyzed for compliance with existing process models. To solve the problem, we propose a methodology that, using a layere...

Economic performance depends crucially on how parties adapt to changing circumstances. We therefore study how the organization of economic activity can facilitate such adaptation. We focus on settings where spot transactions would produce inefficient adaptation, so we ask whether alternative governance structures (allocations of control) facilitate relational contracts that improve on spot adap...

I examine the theoretical foundations underlying the incomplete contracts literature. A common justi,cation for the assumption that contracts are not fully contingent on the state of nature is to point out that some aspects of the state may be unforeseen or indescribable to the contracting partners at the time the contract is written. I argue, however, that as long as risk-averse parties can fo...

We develop a model of strategic contractual incompleteness that identifies conditions under which principals might omit even costlessly verifiable terms. We then use experiments to test comparative statics predictions of the model. While it is well known that verifiability imperfections can limit complete contracting, researchers know less about how the degree of imperfection affects endogenous...