It is often argued that competition forces managers to make better choices, thus favoring managerial autonomy in decision making. I formalize and challenge this idea. Suppose that managers care about keeping their position or avoiding interference, and that they can make strategic choices that a¤ect both the expected pro...ts of the ...rm and their riskiness. Even if competition at ...rst pushes the manager towards pro...t maximization as commonly argued, I show that further increases in

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... tive forces might as well lead him to take excessive risks if the threat on his position is strong enough. To curb this possibility, the principal-owner optimally reduces the degree of autonomy granted to the manager. Hence higher levels of managerial autonomy are more likely for intermediate levels of competition. JEL Codes: D23, L22, M12, M21