Intertemporal Choice, Hostile Takeovers and the Principal-Agent Problem: Corporate Managers Versus Political Agents

Journal of Social, Political and Economic Studies, Vol. 17, No. 2, Summer 1992

11 Pages Posted: 4 Aug 2011

See all articles by Dwight Lee

Dwight Lee

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics

Robert L. Sexton

Pepperdine University - Economics Department

Date Written: 1992

Abstract

It is a commonly held belief that corporations, in pursuit of short-term profit, typically ignore the interests of the future [see Reich (1983), and Carnoy and Shearer (1980)]. According to this argument, the emphasis on the short-run explains a whole host of problems such as: an eroding industrial base, a lack of competitiveness in the world market, the energy crisis of the seventies, and the environmental "mess." The solution advocated by Reich (1983) and others is to substitute political action for private action. However, in this paper we argue that this would be a misguided policy prescription, especially since it is the presence of transferable property rights that makes corporate leaders more conscious of future decisions than their counterpart - political agents.

Suggested Citation

Lee, Dwight and Sexton, Robert L., Intertemporal Choice, Hostile Takeovers and the Principal-Agent Problem: Corporate Managers Versus Political Agents (1992). Journal of Social, Political and Economic Studies, Vol. 17, No. 2, Summer 1992. Available at SSRN: https://ssrn.com/abstract=1904942

Dwight Lee (Contact Author)

University of Georgia - C. Herman and Mary Virginia Terry College of Business - Department of Economics ( email )

Athens, GA 30602-6254
United States

Robert L. Sexton

Pepperdine University - Economics Department ( email )

24255 Pacific Coast Highway
Malibu, CA 90263
United States

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