IDEAS home Printed from https://ideas.repec.org/a/taf/raaexx/v28y2021i1p94-116.html
   My bibliography  Save this article

Free riding, empire building, and cost management prior to and post municipal enterprise mergers in Japan

Author

Listed:
  • Shohei Nagasawa
  • Mizue Nagasawa

Abstract

Opportunistic overspending tendencies induce inflexible cost adjustments and encourage bad cost stickiness. To examine whether this perspective applies to public sector organizations (PSOs) and mergers, we test the asymmetric cost behaviors, (1) free riding and (2) empire building, associated with managerial incentives in merged Japanese municipal enterprises. Consequently, we find evidence that prior to mergers, administrators’ opportunistic spending originating from free-riding behavior affects cost stickiness; conversely, an analysis of the post-merger sample shows that the empire-building incentive might partly mitigate sticky costs. Our results corroborate the contradictory role of managerial discretion in resource adjustment decisions between pre- and post-mergers.

Suggested Citation

  • Shohei Nagasawa & Mizue Nagasawa, 2021. "Free riding, empire building, and cost management prior to and post municipal enterprise mergers in Japan," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 28(1), pages 94-116, January.
  • Handle: RePEc:taf:raaexx:v:28:y:2021:i:1:p:94-116
    DOI: 10.1080/16081625.2020.1845001
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/16081625.2020.1845001
    Download Restriction: Access to full text is restricted to subscribers.

    File URL: https://libkey.io/10.1080/16081625.2020.1845001?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

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


    Cited by:

    1. Ligorio, Lorenzo & Caputo, Fabio & Venturelli, Andrea, 2022. "Sustainability disclosure and reporting by municipally owned water utilities," Utilities Policy, Elsevier, vol. 77(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:raaexx:v:28:y:2021:i:1:p:94-116. See general information about how to correct material in RePEc.

    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.

    We have no bibliographic references for this item. You can help adding them by using 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/raae20 .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.