Does Asset Ownership Always Motivate Managers? Outside Options and the Property Rights Theory of the Firm
47 Pages Posted: 21 Feb 1998
There are 2 versions of this paper
Does Asset Ownership Always Motivate Managers? Outside Options and the Property Rights Theory of the Firm
Abstract
This paper studies the Grossman-Hart-Moore (GHM) "property rights" approach to the theory of the firm under alternating-owners bargaining. When managers can pursue other occupations whilst negotiating over the division of the gains from cooperation, the GHM results obtain. If taking the best alternative job terminates bargaining, outcomes are very different. Sometimes an agent with an important investment decision should not own the asset she works with; sometimes independent assets should be owned together; sometimes strictly complementary assets should be owned separately.
JEL Classification: D21, D23, G39
Suggested Citation: Suggested Citation
Do you have negative results from your research you’d like to share?
Recommended Papers
-
Subjective Performance Measures in Optimal Incentive Contracts
By George P. Baker, Robert S. Gibbons, ...
-
By Luigi Zingales and Raghuram G. Rajan
-
By Raghuram G. Rajan and Luigi Zingales
-
Implicit Contracts and the Theory of the Firm
By George P. Baker, Robert S. Gibbons, ...
-
Relational Contracts and the Theory of the Firm
By George P. Baker, Robert S. Gibbons, ...
-
The Firm as a Dedicated Hierarchy: A Theory of the Origin and Growth of Firms
By Raghuram G. Rajan and Luigi Zingales
-
The Firm as a Dedicated Hierarchy: A Theory of the Origin and Growth of Firms
By Raghuram G. Rajan and Luigi Zingales