Why Should the Boss Own the Assets?
Posted: 29 Aug 2001
In the context of an employment relationship, I present an argument suggesting that it is more efficient for the boss to own 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.
Keywords: Asset Ownership, Integration, Theory of the Firm
JEL Classification: D23, L22
Suggested Citation: Suggested Citation