Corporate Governance quiz

If an exec is not too confident in his abilities to perform, then implicit incentive (e.g. fear of getting fired) will be sufficient and there will be no need for an explicit incentive such as performance bonus. On the other hand, if the manager is really bullish in his abilities, he/she may be willing to accept a high level of performance bonus with the chance of getting fired for under-performance. In other words, explicit and implicit incentives act as complements.

B

haha “stink Inc”

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