Alternative Models of Managerial Behavior: Empirical Tests for the Petroleum Industry
AbstractExplanations for takeovers often focus on managerial inefficiency as an explanation. This paper utilizes panel data for a set of petroleum firms to test two competing hypotheses about managerial inefficiency--the heterogeneous managerial model versus the free cash flow variant of agency theory. By focusing on specific investment categories like exploration, bidding and leasing activity, and R$50D, the effects of changes in management and cash flow are better isolated. The empirical results provide considerable support for the free cash flow variant of agency theory showing that reduced cash flow due to restructuring will curtail investments in exploration, bidding and leasing activity, and R$50D. Copyright 1989 by MIT Press.
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Bibliographic InfoArticle provided by MIT Press in its journal Review of Economics & Statistics.
Volume (Year): 71 (1989)
Issue (Month): 4 (November)
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- Sarmistha Pal, 2005.
"Do External Funds Yield Lower Returns? Recent Evidence From East Asian Economies,"
Development and Comp Systems
- Driffield, Nigel & Pal, Sarmistha, 2006. "Do external funds yield lower returns?: Recent evidence from East Asian economies," Journal of Asian Economics, Elsevier, vol. 17(1), pages 171-188, February.
- Sarmistha Pal & Nigel Driffield, 2003. "Do External Funds Yield Lower Returns ? Recent Evidence From East Asian Economies," Finance 0309002, EconWPA, revised 15 Mar 2004.
- Steve Thompson, 1999. "Increasingly Marginal Utilities: Diversification and Free Cash Flow in Newly Privatized UK Utilities," Review of Industrial Organization, Springer, vol. 15(1), pages 25-42, August.
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