The Benefit and Cost of Winner Picking: Redistribution Vs Incentives

Arbeitspapier

The Benefit and Cost of Winner Picking: Redistribution Vs Incentives |AB| A multi-divisional firm can engage in "winner-picking" to redistribute scarce funds efficiently across divisions. But there is a conflict between rewarding winners (investing) and producing resources internally to reward winners (incentives). Managers in winning divisions are tempted to free-ride on resources produced by managers in loosing divisions whose incentives to produce resources, anticipating their loss, are also weakened. Corporate headquarter's investment and incentive policy are therefore inextricably linked and have to be treated as jointly endogenous. The analysis links corporate strategy, compensation and the value of diversification to the characteristics of multi-divisional firms.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Bonn Econ Discussion Papers ; No. 31/2002

Classification and Topics

• Classification: Wirtschaft ; Mergers; Acquisitions; Restructuring; Voting; Proxy Contests; Corporate Governance ; Capital Budgeting; Fixed Investment and Inventory Studies; Capacity ; Organization of Production
• Subject: Conglomerate ; Internal capital market ; Konglomerat ; Profit Center ; Betriebliche Budgetierung ; Leistungsanreiz ; Moral Hazard ; Wettbewerbsstrategie ; Diversifikation ; Kosten-Nutzen-Analyse ; Theorie

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Gautier, Axel ; Heider, Florian
• Event: Veröffentlichung
• (who): University of Bonn, Bonn Graduate School of Economics (BGSE)
• (where): Bonn
• (when): 2002

Further information

• Handle: http://hdl.handle.net/10419/22852
• Last update: 10.03.2025, 11:42 AM CET