Expense Preference and Managerial Control: the Case of the Banking Firm
AbstractThis article presents a test of the expense-preference theory of the firm as it applies to the banking industry. We use a model which incorporates explicitly the role of control by the firm's owners in determining the level of firm's inputs chosen by managers and yields implications which allow ownership information to be used in a more extensive test of the expense-preference hypothesis than heretofore has been conducted. We test the model by using detailed information on the dispersion of ownership and on other characteristics of a large number of individual banking firms. Consistent with the implications of expense-preference behavior, manager-controlled banks operating in noncompetitive markets are found to spend more on items likely to be preferred by managers than do owner-controlled banks in the same situation. This, along with other results, lends support to the expense-preference model over the more traditional one of profit maximization.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by The RAND Corporation in its journal Bell Journal of Economics.
Volume (Year): 11 (1980)
Issue (Month): 2 (Autumn)
Contact details of provider:
Web page: http://www.rje.org
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Marianne Bertrand & Sendhil Mullainathan, 1999.
"Is There a Discretion in Wage Setting? A Test Using Takeover Legislation,"
RAND Journal of Economics,
The RAND Corporation, vol. 30(3), pages 535-554, Autumn.
- Bertrand, M. & Mullainathan, S., 1998. "Is there Discretion in Wage Setting? A Test Using Takeover Legislation," Papers 203, Princeton, Woodrow Wilson School - Public and International Affairs.
- Sendhil Mullainathan & Marianne Bertrand, 1998. "Is there Discretion in Wage Setting? A Test Using Takeover Legislation," Working papers 98-19, Massachusetts Institute of Technology (MIT), Department of Economics.
- Marianne Bertrand & Sendhil Mullainathan, 1998. "Is There Discretion in Wage Setting? A Test Using Takeover Legislation," NBER Working Papers 6807, National Bureau of Economic Research, Inc.
- Höring, Dirk & Gründl, Helmut, 2011. "Risk management's place in an organisation: A tradeoff between independence and co-ordination," ICIR Working Paper Series 05/11, International Center for Insurance Regulation (ICIR), Goethe University Frankfurt.
- repec:fth:prinin:406 is not listed on IDEAS
- Marianne Bertrand & Sendhil Mullainathan, 2003.
"Enjoying the Quiet Life? Corporate Governance and Managerial Preferences,"
Journal of Political Economy,
University of Chicago Press, vol. 111(5), pages 1043-1075, October.
- Bertrand, Marianne & Mullainathan, Sendhil, 2003. "Enjoying the Quiet Life? Corporate Governance and Managerial Preferences," Scholarly Articles 3429713, Harvard University Department of Economics.
- Stephen D. Prowse, 1995. "Alternative methods of corporate control in commercial banks," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Q III, pages 24-36.
- repec:pri:indrel:406 is not listed on IDEAS
- Robert DeYoung, 1998. "Management Quality and X-Inefficiency in National Banks," Journal of Financial Services Research, Springer, vol. 13(1), pages 5-22, February.
- repec:pri:indrel:785 is not listed on IDEAS
- Gaston, Noel, 1997. "Efficiency wages, managerial discretion, and the fear of bankruptcy," Journal of Economic Behavior & Organization, Elsevier, vol. 33(1), pages 41-59, May.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: ().
If references are entirely missing, you can add them using this form.