Managerial control inside the firm

Arbeitspapier

This paper proposes an implicit control mechanism of managers inside the firm. We argue that the need to motivate workers may make it beneficial for a self-interested, short-sighted manager to pursue long-run viability of the firm. When the firm is in a stable environment, this implicit control mechanism may not contradict shareholder value maximization. However, when the firm needs restructuring, this mechanism damages firm value. We discuss when external governance is desirable, and when it is not. Our model also offers economic explanations for some related issues in managerial behavior such as restructuring aversion, survival motive, and excessive risk aversion.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: ISER Discussion Paper ; No. 635

Classification and Topics

• Classification: Wirtschaft ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Labor Contracts
• Subject: corporate governance ; worker incentives ; autonomous management ; restructuring ; corporate survival ; managerial risk aversion ; Corporate Governance ; Leistungsmotivation ; Leistungsanreiz ; Organisatorischer Wandel ; Management ; Risikoaversion ; Unternehmenswert

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hirota, Shinichi ; Kawamura, Kohei
• Event: Veröffentlichung
• (who): Osaka University, Institute of Social and Economic Research (ISER)
• (where): Osaka
• (when): 2005

Further information

• Handle: http://hdl.handle.net/10419/92631
• Last update: 10.03.2025, 11:44 AM CET