Abstract: The aim of this paper is to analyze how employees may affect firm's corporate governance. In particular, we analyze a shareholder-manager relationship through a principal-agent framework. The manager is the agent in charge of taking decisions for firm's success. Yet, when deciding, the manager takes into account employees'preferences, i.e. the manager wants to enjoy a "quiet life". Our result highlights that having a quiet-life manager is not necessarily linked to destroy value, as suggested in recent research. It might even recover part of the efficient decisions (at a cost borne by the shareholders)

Keywords: Quiet-life behavior; corporate Governance; Agency problem

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