Advanced Search
MyIDEAS: Login to save this paper or follow this series

Corporate Control and Balance of Powers

Contents:

Author Info

  • Acemoglu, D.

Abstract

Most managers enjoy considerable discretion and protection from possible interventions which enables them to look after their own interests. This is often attributed to the dispersion of shareholders and regulations that deter effective outside interventions. This paper presents a model that has empire-building managers who have important effort choices. Because the manager is not the residual claimant of the relevant returns, in order to provide him with the opportunity to share some of the rents he creates. To achieve this, equilibrium organizational form separates control from ownership and tries to contain the manager's empire-building incentives using performance contracts and the capital structure rather than more direct methods of control. Nevertheless, owners will often be unable to commit to managerial discretion because ownership of the assets gives them the right to decide what use that asset will be put and thus a right to fire the manager. In this case, it will be necessary to choose a disperse ownership structure in order to create free-rider effects among shareholders and thus to commit them to be passive. Thus, the dispersion of ownership, rather than being the cause of the problem, may be a solution to a more serious one. Nevertheless, there will often be benefits to having large shareholders. In this case, the paper shows that an intermediate level of dispersion is the optimum.

(This abstract was borrowed from another version of this item.)

Download Info

To our knowledge, this item is not available for download. To find whether it is available, there are three options:
1. Check below under "Related research" whether another version of this item is available online.
2. Check on the provider's web page whether it is in fact available.
3. Perform a search for a similarly titled item that would be available.

Bibliographic Info

Paper provided by Massachusetts Institute of Technology (MIT), Department of Economics in its series Working papers with number 94-22.

as in new window
Length: 27 pages
Date of creation: 1994
Date of revision:
Handle: RePEc:mit:worpap:94-22

Contact details of provider:
Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), DEPARTMENT OF ECONOMICS, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA
Phone: (617) 253-3361
Fax: (617) 253-1330
Web page: http://econ-www.mit.edu/
More information through EDIRC

Order Information:
Postal: MASSACHUSETTS INSTITUTE OF TECHNOLOGY (MIT), DEPARTMENT OF ECONOMICS, 50 MEMORIAL DRIVE CAMBRIDGE MASSACHUSETTS 02142 USA
Email:

Related research

Keywords: property rights ; management ; contracts;

Other versions of this item:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Jason G. Cummins & Ingmar Nyman, 2001. "Optimal investment with fixed refinancing costs," Finance and Economics Discussion Series 2001-40, Board of Governors of the Federal Reserve System (U.S.).
  2. Boot, Arnoud W A & Macey, Jonathon, 1999. "Objectivity, Proximity and Adaptability in Corporate Governance," CEPR Discussion Papers 2257, C.E.P.R. Discussion Papers.
  3. Daron Acemoglu & Miles Gietzmann, 1998. "Auditor independence, incomplete contracts and the role of legal liability," European Accounting Review, Taylor & Francis Journals, vol. 6(3), pages 355-375.
  4. Ralph P. Heinrich, 1999. "A Model of Corporate Governance as a System," Kiel Working Papers 931, Kiel Institute for the World Economy.
  5. repec:dgr:uvatin:2098064 is not listed on IDEAS
  6. Arnoud W.A. Boot & Jonathan R. Macey, 1998. "Objectivity, Control and Adaptability in Corporate Governance," Tinbergen Institute Discussion Papers 98-064/2, Tinbergen Institute.
  7. repec:dgr:uvatin:1998064 is not listed on IDEAS

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:mit:worpap:94-22. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Linda Woodbury).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.