Discouraging Rivals: Managerial Rent-Seeking and Economic Inefficiencies
AbstractWe 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.
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Bibliographic InfoPaper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4145.
Date of creation: May 1997
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Publication status: published as American Economic Review, vol. 85, no.5, pp. 1301-1312, December 1995.
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Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.
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Other versions of this item:
- Edlin, Aaron S & Stiglitz, Joseph E, 1995. "Discouraging Rivals: Managerial Rent-Seeking and Economic Inefficiencies," American Economic Review, American Economic Association, vol. 85(5), pages 1301-12, December.
- D92 - Microeconomics - - Intertemporal Choice - - - Intertemporal Firm Choice, Investment, Capacity, and Financing
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- Bagwell, Laurie Simon & Zechner, Josef, 1993. " Influence Costs and Capital Structure," Journal of Finance, American Finance Association, vol. 48(3), pages 975-1008, July.
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