Heterogeneity in Organizational Form: Why Otherwise Identical Firms Choose Different Incentives for Their Managers
AbstractProduct-market competition affects the benefits from providing incentives to managers. In particular, the best response to other firms providing strong incentives can be to provide weak incentives. Conversely, the best response to other firms providing weak incentives can be to provide strong incentives. In equilibrium only a fraction of the firms may, therefore, provide strong incentives. Moreover, all equilibria may exhibit heterogeneity in incentives due to the nonconvexities inherent in the underlying agency problem between firms and their managers. This article also investigates how increased competition affects the strength of the incentives provided in the equilibrium.
Download InfoTo 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 InfoPaper provided by University of California at Berkeley in its series Economics Working Papers with number 92-193.
Date of creation: 01 May 1992
Date of revision:
Contact details of provider:
Postal: University of California at Berkeley, Berkeley, CA USA
Web page: http://www.haas.berkeley.edu/groups/iber/wps/econwp.html
More information through EDIRC
Postal: IBER, F502 Haas Building, University of California, Berkeley CA 94720-1922
Other versions of this item:
- Benjamin E. Hermalin, 1994. "Heterogeneity in Organizational Form: Why Otherwise Identical Firms Choose Different Incentives for Their Managers," RAND Journal of Economics, The RAND Corporation, vol. 25(4), pages 518-537, Winter.
- Hermalin, Benjamin E., 1992. "Heterogeneity in Organizational Form: Why Otherwise Identical Firms Choose Different Incentives for Their Managers," Department of Economics, Working Paper Series qt4v4548gz, Department of Economics, Institute for Business and Economic Research, UC Berkeley.
You can help add them by filling out this form.
CitEc Project, subscribe to its RSS feed for this item.
- Boyer, Marcel & Laffont, Jean-Jacques, 2003.
"Competition and the reform of incentive schemes in the regulated sector,"
Journal of Public Economics,
Elsevier, vol. 87(9-10), pages 2369-2396, September.
- Boyer, Marcel, 2003. "Competition and the reform of incentive schemes in the regulated sector," Journal of Public Economics, Elsevier, vol. 87(7-8), pages 1353-1381, August.
- Marcel Boyer & Jean-Jacques Laffont, 2000. "Competition and the Reform of Incentive Schemes in the Regulated Sector," CIRANO Working Papers 2000s-58, CIRANO.
- Renee B. Adams & Benjamin E. Hermalin & Michael S. Weisbach, 2010.
"The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey,"
Journal of Economic Literature,
American Economic Association, vol. 48(1), pages 58-107, March.
- Renée Adams & Benjamin E. Hermalin & Michael S. Weisbach, 2008. "The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey," NBER Working Papers 14486, National Bureau of Economic Research, Inc.
- Adams, Renee & Hermalin, Benjamin E. & Weisbach, Michael S., 2009. "The Role of Boards of Directors in Corporate Governance: A Conceptual Framework and Survey," Working Paper Series 2008-21, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
- Wallace HUFFMAN & Richard E. JUST, 1995. "Transaction Costs, Fads, And Politically Motivated Misdirection In Agricultural Research," Staff Papers 277, Iowa State University Department of Economics.
- AMIR, Rabah & GARCIA, Filomena & KNAUFF, Malgorzata, 2006.
"Endogenous heterogeneity in strategic models: symmetry-breaking via strategic substitutes and nonconcavities,"
CORE Discussion Papers
2006008, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Rabah Amir & Filomena Garcia & Malgorzata Knauff, 2006. "Endogenous Heterogeneity in Strategic Models: Symmetry-breaking via Strategic Substitutes and Nonconcavities," Working Papers Department of Economics 2006/29, ISEG - School of Economics and Management, Department of Economics, University of Lisbon.
- Cronqvist, Henrik & Low, Angie & Nilsson, Mattias, 2007. "Does Corporate Culture Matter for Firm Policies?," SIFR Research Report Series 48, Institute for Financial Research.
- Amihai Glazer & Vesa Kanniainen & Panu Poutvaara, 2004.
"Initial Luck, Status-Seeking and Snowballs Lead to Corporate Success and Failure,"
CESifo Working Paper Series
1216, CESifo Group Munich.
- Glazer, Amihai & Kanniainen, Vesa & Poutvaara, Panu, 2004. "Initial Luck, Status-Seeking and Snowballs Lead to Corporate Success and Failure," IZA Discussion Papers 1426, Institute for the Study of Labor (IZA).
- Yijiang Wang, . "Demand, Supply and Coordination: An Integrated Theory of the Division of Labor," Working Papers 0405, Human Resources and Labor Studies, University of Minnesota (Twin Cities Campus).
- Siemens, Ferdinand von, 2005. "Fairness, Adverse Selection, and Employment Contracts," Discussion Papers in Economics 669, University of Munich, Department of Economics.
- Cronqvist, Henrik & Low, Angie & Nilsson, Mattias, 2007. "Does Corporate Culture Matter for Firm Policies?," Working Paper Series 2007-1, Ohio State University, Charles A. Dice Center for Research in Financial Economics.
- Walter A Cont, 2001. "Essays on Contract Design: Delegation and Agency Problems, and Monitoring Under Collusion," Levine's Working Paper Archive 625018000000000122, David K. Levine.
- Jovanovic, Dragan, 2014.
"Mergers, managerial incentives, and efficiencies,"
DICE Discussion Papers
88 [rev.], Heinrich‐Heine‐Universität Düsseldorf, Düsseldorf Institute for Competition Economics (DICE).
- Federico Etro, 2010. "Endogenous Market Structures and Contract Theory," Working Papers 181, University of Milano-Bicocca, Department of Economics, revised Mar 2010.
- Graziano, Clara & Parigi, Bruno M., 1998. "Do managers work harder in competitive industries?," Journal of Economic Behavior & Organization, Elsevier, vol. 34(3), pages 489-498, March.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Christopher F. Baum).
If references are entirely missing, you can add them using this form.