Why Should the Boss Own the Assets?

MIT Sloan Working Paper No.

20 Pages Posted: 11 Dec 1998

See all articles by Birger Wernerfelt

Birger Wernerfelt

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Multiple version iconThere are 2 versions of this paper

Date Written: July 2001

Abstract

In the context of an employment relationship, I present an argument suggesting that it is more efficient for the boss to own the productive assets. The idea is that a conflict between productivity and depreciation is internalized if the player deciding what an asset is used for also has residual claims. An empirical test finds evidence consistent with this. By asking whether the boss should own the assets, the paper reverses the reasoning from the literature in which it is argued that the owner has power and thus is the boss.

JEL Classification: D21, D23, G34

Suggested Citation

Wernerfelt, Birger, Why Should the Boss Own the Assets? (July 2001). MIT Sloan Working Paper No.. Available at SSRN: https://ssrn.com/abstract=141054 or http://dx.doi.org/10.2139/ssrn.141054

Birger Wernerfelt (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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