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Are explicit and implicit incentives complements or substitutes? The threat of dis- missal or other interferences resulting from poor performance provides incen- tives for managers over and beyond those provided by explicit incentives. Explicit and implicit incentives are therefore substitutes: with stronger implicit incentives, fewer stocks and stock options are needed to curb managerial moral hazard.
(Level III Volume 4 Fixed Income and Equity Portfolio Management , 4th Edition. Pearson Learning Solutions p. 303).
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