IDEAS home Printed from https://ideas.repec.org/p/upf/upfgen/148.html
   My bibliography  Save this paper

Managerial incentives for mergers

Author

Listed:
  • Ramon Faulí
  • Massimo Motta

Abstract

We study managerial incentives in a model where managers take not only product market but also takeover decisions. We show that the optimal contract includes an incentive to increase the firm's sales, under both quantity and price competition. This result is in contrast to the previous literature and hinges on the fact that with a more aggressive manager rival firms earn lower profits and are willing to sell out at a lower price. \\ However, as a side--effect of such a contract, the manager might take over more rivals than would be profitable.

Suggested Citation

  • Ramon Faulí & Massimo Motta, 1995. "Managerial incentives for mergers," Economics Working Papers 148, Department of Economics and Business, Universitat Pompeu Fabra.
    • Handle: RePEc:upf:upfgen:148
    as

    Download full text from publisher

    File URL: https://econ-papers.upf.edu/papers/148.pdf
    File Function: Whole Paper
    Download Restriction: no
    ---><---

    Other versions of this item:

    More about this item

    JEL classification:

    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L12 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Monopoly; Monopolization Strategies
    • L2 - Industrial Organization - - Firm Objectives, Organization, and Behavior

    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:upf:upfgen:148. 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: the person in charge (email available below). General contact details of provider: http://www.econ.upf.edu/ .

    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.