Untangling the Internal Formal Contract Puzzle

Jing Tang, Wenqian Wang

Research output: Contribution to conferenceConference paperpeer-review


Contrary to the opinion that formal contracts are hard to apply within the firm given the existence of fiat or line of commands, in practice firms often use formal contracts to govern internal transactions. Building on the current governance literature, high-powered incentive literature, and the multi-task environment literature, we provide both practical and theoretical foundations for internal formal contracts and further articulate the boundary conditions when it will be more likely to be adopted by firms.


Dive into the research topics of 'Untangling the Internal Formal Contract Puzzle'. Together they form a unique fingerprint.

Cite this