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Managerial Versus Entrepreneurial Firms: The Benefits Of Separating Ownership And Control

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  • Matthias Kräkel

Abstract

Agency theory emphasizes that separating ownership and control can lead to inefficiencies in corporations, but the literature on strategic delegation points out that the owner will profit from this separation due to advantages from self-commitment. In this paper, both literatures are combined. The results show that strategic delegation can be even more profitable in the presence of agency problems. Furthermore, delegating takeover decisions to managers yields positive welfare effects.

Suggested Citation

  • Matthias Kräkel, 2004. "Managerial Versus Entrepreneurial Firms: The Benefits Of Separating Ownership And Control," Schmalenbach Business Review (sbr), LMU Munich School of Management, vol. 56(1), pages 2-19, January.
  • Handle: RePEc:sbr:abstra:v:56:y:2004:i:1:p:2-19
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    Keywords

    Agency Theory; Strategic Delegation; Takeovers.;

    JEL classification:

    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • M2 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics

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