Discouraging Rivals: Managerial Rent-Seeking and Economic Inefficiencies
We 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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Volume (Year): 85 (1995)
Issue (Month): 5 (December)
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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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