Managerial Versus Entrepreneurial Firms: The Benefits of Separating Ownership and Control

Kräkel, Matthias

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Managerial Versus Entrepreneurial Firms: The Benefits of Separating Ownership and Control

Schmalenbach Business Review, Vol. 56, pp. 2-19, January 2004

18 Pages Posted: 6 Jun 2004

See all articles by Matthias Kräkel

Matthias Kräkel

University of Bonn - Economic Science Area; Institute for the Study of Labor (IZA)

Abstract

Agency theory emphasizes that separating ownership and control can lead to inefficiencies in corporations, but the literature on strategic delegation points out that the owner will profit from this separation due to advantages from self-commitment. In this paper, both literatures are combined. The results show that strategic delegation can be even more profitable in the presence of agency problems. Furthermore, delegating takeover decisions to managers yields positive welfare effects.

Keywords: Agency theory, strategic delegation, takeovers

JEL Classification: L1, M2

Suggested Citation: Suggested Citation

Kräkel, Matthias, Managerial Versus Entrepreneurial Firms: The Benefits of Separating Ownership and Control. Schmalenbach Business Review, Vol. 56, pp. 2-19, January 2004, Available at SSRN: https://ssrn.com/abstract=555064