 On the Efficiency of Internal and External Corporate Control MechanismsJames P. Walsh and James K. Seward Chapter 9 in The Management of Corporate Acquisitions, 1994, pp 191-247 from Palgrave Macmillan Abstract: Abstract Managers of contemporary publicly held organisations typically are not the owners. Rather, a specialisation of responsibilities has evolved whereby managers coordinate activities within the firm and position it appropriately in its competitive environment; the owners of the firm bear financial risk in the hope of retaining the difference between the firm’s productive cash-flows and the outflows of its promised payments (Fama and Jensen 1983a, 1983b). As the firm’s owners would suffer tremendous financial losses if the firm failed, they tend to diversify their holdings across a variety of firms as a hedge against such a possibility. As a result, the individual owner has little interest in conducting, or even closely monitoring, the day-to-day activities in all of the firms in which he or she has a financial interest (Fama 1980). The owners hire boards of directors who, in turn, hire managers to perform these duties. Keywords: Firm Performance; Financial Economic; External Control; Executive Compensation; Strategic Management Journal (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-13016-0_9 Ordering information: This item can be ordered from DOI: 10.1007/978-1-349-13016-0_9 Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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