Bureaucracy as a Mechanism to Generate Information
AbstractFirms that maintain no formal record of actions and events would hardly be considered well managed. Yet, organizations that require the recording of actions and the filing of reports are often labelled ``bureaucratic" and inefficient. We argue that the thin line between efficient management practices and inefficient bureaucracy is crossed to curb managerial agency costs in a multilayer hierarchy. The model predicts that bureaucracy increases with the frequency of managerial turnover, and it establishes a link between bureaucracy, incentive schemes, and leverage in a cross-section of firms.
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Bibliographic InfoArticle provided by The RAND Corporation in its journal RAND Journal of Economics.
Volume (Year): 35 (2004)
Issue (Month): 2 (Summer)
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Web page: http://www.rje.org
Other versions of this item:
- Novaes, Walter & Zingales, Luigi, 2003. "Bureaucracy as a Mechanism to Generate Information," CEPR Discussion Papers 3945, C.E.P.R. Discussion Papers.
- Walter Novaes & Luigi Zingales, 1998. "Bureaucracy as a Mechanism to Generate Information," CRSP working papers 477, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
- Walter Novaes & Luigi Zingales, 2003. "Bureaucracy as a Mechanism to Generate Information," NBER Working Papers 9763, National Bureau of Economic Research, Inc.
- D2 - Microeconomics - - Production and Organizations
- G3 - Financial Economics - - Corporate Finance and Governance
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