When Shareholders Aren’t Watching, Managers Misbehave
Chicago Booth’s Elisabeth Kempf, along with Bocconi University’s Alberto Manconi and Tilburg University’s Oliver G. Spalt, examines the economic impact of an environment in which shareholders are unable to actively monitor all the companies they invest in. Consistent with the standard principal-agent framework from economic theory, in which agents (managers) act on behalf of principals (shareholders), the researchers find that when shareholders are ”distracted,” executives have … [ Read more ]
Content: Article | Authors: Alberto Manconi, Alex Verkhivker, Elisabeth Kempf, Oliver G. Spalt | Source: University of Chicago | Subject: Corporate Governance
Modigliani and Miller Meet Chandler: Organizational Complexity and Capital Structure
We study how the degree of organizational complexity of a firm relates to its corporate financial policies. We measure complexity as the number of layers in the firm’s subsidiary structure, and focus on a sample of US firms over the period 1996-2006. We argue that organizational complexity makes the firm opaque and increases the asymmetry of information between it and the market. We show that … [ Read more ]
Content: Article | Authors: Alberto Manconi, Massimo Massa | Source: Social Science Research Network (SSRN) | Subjects: Finance, Organizational Behavior