EconPapers    
Economics at your fingertips  
 

Long-Term Investment and Monitoring in Financial Relationships

Ernst-Ludwig Thadden
Additional contact information
Ernst-Ludwig Thadden: Université de Lausanne

Chapter 7 in Property Relations, Incentives and Welfare, 1997, pp 171-193 from Palgrave Macmillan

Abstract: Abstract Are firms prone to pursuing short-term goals, although long-run strategies would be superior? Especially in the USA, with the surge of takeovers in the 1980s and the increased use of stock options as managerial incentive schemes, this question has been related to possible deficiencies in the workings of the capital markets. For example, in a discussion of the recent wave of hostile takeovers in the USA, Scherer (1988) writes: Perhaps the most controversial and least understood consequence of the 1980s takeover movement is its alleged propensity to shorten managerial decision-making horizons and bias profit maximization toward the short run. If the allegation is true, it could be the most important implication of takeovers, since American industry is confronted by European and especially Asian rivals who invest heavily and practice penetration and learning curve pricing — manifestations of a long-run strategy.

Keywords: Expected Profit; Incentive Compatibility; Large Shareholder; Incentive Compatibility Constraint; Debt Contract (search for similar items in EconPapers)
Date: 1997
References: Add references at CitEc
Citations:

There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:pal:intecp:978-1-349-25287-9_7

Ordering information: This item can be ordered from
http://www.palgrave.com/9781349252879

DOI: 10.1007/978-1-349-25287-9_7

Access Statistics for this chapter

More chapters in International Economic Association Series from Palgrave Macmillan
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().

 
Page updated 2025-03-23
Handle: RePEc:pal:intecp:978-1-349-25287-9_7