Managerial control inside the firm

Research output: Contribution to journalArticle

7 Citations (Scopus)

Abstract

This paper proposes an implicit control mechanism of managers inside the firm. We argue that the need to motivate workers may make it beneficial for a self-interested, short-sighted manager to pursue the long-term viability of a firm. When the firm is in a stable environment, this implicit control mechanism may not contradict shareholder value maximization. However, when the firm needs restructuring, this mechanism diminishes firm value. We discuss when external governance is desirable, and when it is not. Our model also offers economic explanations for some related issues in managerial behavior, such as restructuring aversion, survival motive, and excessive risk aversion. J. Japanese Int. Economies 21 (3) (2007) 324-335.

Original languageEnglish
Pages (from-to)324-335
Number of pages12
JournalJournal of the Japanese and International Economies
Volume21
Issue number3
DOIs
Publication statusPublished - 2007 Sep

Fingerprint

firm
restructuring
manager
shareholder value
Managerial control
governance
worker
economy
Managers
Control mechanism
economics
Values
Managerial behavior
Viability
Firm value
Workers
Economics
Shareholder value
Risk aversion
Japanese economy

Keywords

  • Autonomous management
  • Corporate governance
  • Corporate survival
  • Managerial risk aversion
  • Restructuring
  • Worker incentives

ASJC Scopus subject areas

  • Economics and Econometrics
  • Finance

Cite this

Managerial control inside the firm. / Hirota, Shinichi; Kawamura, Kohei.

In: Journal of the Japanese and International Economies, Vol. 21, No. 3, 09.2007, p. 324-335.

Research output: Contribution to journalArticle

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