{"status":"ok","message-type":"work","message-version":"1.0.0","message":{"indexed":{"date-parts":[[2026,2,10]],"date-time":"2026-02-10T05:47:26Z","timestamp":1770702446851,"version":"3.49.0"},"reference-count":0,"publisher":"Elsevier BV","content-domain":{"domain":[],"crossmark-restriction":false},"short-container-title":["SSRN Journal"],"abstract":"<jats:p>This paper develops a dynamic compensation scheme that aligns the incentives of a shareholder and a manager, who sequentially decides when to invest in and when to abandon a project. Unlike the existing literature, our framework specifies all contractual parameters ex ante, without subsequent revision of the sharing rule. The model determines the optimal severance payment, sharing rate, and fixed wages that jointly align the investment and abandonment thresholds, resulting in a credible and time-consistent contract. We further examine how behavioral distortions in managerial attitudes toward adverse conditions, distinguishing between fair-weather and persistent managers, affect project abandonment and how the optimal contract can neutralize such biases.<\/jats:p>","DOI":"10.2139\/ssrn.6154706","type":"journal-article","created":{"date-parts":[[2026,2,9]],"date-time":"2026-02-09T11:44:53Z","timestamp":1770637493000},"source":"Crossref","is-referenced-by-count":0,"title":["Optimal Managerial Contracting with Investment and Abandonment Decisions"],"prefix":"10.2139","author":[{"ORCID":"https:\/\/orcid.org\/0009-0009-7661-9882","authenticated-orcid":true,"given":"David","family":"Cardoso","sequence":"first","affiliation":[]},{"ORCID":"https:\/\/orcid.org\/0000-0001-7601-2372","authenticated-orcid":true,"given":"Paulo","family":"Pereira","sequence":"additional","affiliation":[]}],"member":"78","published-online":{"date-parts":[[2026]]},"container-title":["SSRN Electronic Journal"],"original-title":[],"language":"en","deposited":{"date-parts":[[2026,2,9]],"date-time":"2026-02-09T11:44:53Z","timestamp":1770637493000},"score":1,"resource":{"primary":{"URL":"https:\/\/www.ssrn.com\/abstract=6154706"}},"subtitle":[],"short-title":[],"issued":{"date-parts":[[2026]]},"references-count":0,"URL":"https:\/\/doi.org\/10.2139\/ssrn.6154706","relation":{},"ISSN":["1556-5068"],"issn-type":[{"value":"1556-5068","type":"electronic"}],"subject":[],"published":{"date-parts":[[2026]]}}}