Discouraging Rivals: Managerial Rent-Seeking and Economic Inefficiencies
52 Pages Posted: 23 Jan 2002 Last revised: 1 May 2022
Date Written: August 1992
Abstract
We argue here for a broader view of the biases in managers' decisions: In general, managerial rent-seeking affects not only the level of investment, but also the form. Our basic hypothesis is simple: given the now well-established scope for managerial discretion, managers have an incentive to exercise that discretion to enhance their income. Any managerial contract is subject to renegotiation, and a manager's pay is the outcome of an often bewildering bargaining process between management, the board of directors, and rival management teams or takeover artists.
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Subjective Performance Measures in Optimal Incentive Contracts
By George P. Baker, Robert S. Gibbons, ...
-
By Luigi Zingales and Raghuram G. Rajan
-
By Raghuram G. Rajan and Luigi Zingales
-
Implicit Contracts and the Theory of the Firm
By George P. Baker, Robert S. Gibbons, ...
-
Relational Contracts and the Theory of the Firm
By George P. Baker, Robert S. Gibbons, ...
-
The Firm as a Dedicated Hierarchy: A Theory of the Origin and Growth of Firms
By Raghuram G. Rajan and Luigi Zingales
-
The Firm as a Dedicated Hierarchy: A Theory of the Origin and Growth of Firms
By Raghuram G. Rajan and Luigi Zingales