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Agency and Control Problems in US Corporations: The Case of Energy-efficient Investment Projects

Stephen DeCanio ()

International Journal of the Economics of Business, 1994, vol. 1, issue 1, 105-124

Abstract: Private sector corporations in the United States fall short of their potential to increase shareholders'1 wealth in a number of ways. One example is the failure to undertake profitable energy conservation investments. Explanations of this phenomenon include agency and moral hazard problems, imperfect information and incentives, myopia, and X-inefficiency. Data from a survey conducted by the US Environmental Protection Agency and from interviews with corporate executives are used to explore these hypotheses. Good overall corporate performance is found to be associated with longer internal payback requirements for energy investments. Suggestions for improving corporate decision-making in this area are proposed.

Keywords: Energy; Efficiency; Agency problems; Myopia; Incentives; Information; Theory of the firm; Organizational behavior; Environment, JEL classifications: D2, D7, D8, L2, Q2, Q4, (search for similar items in EconPapers)
Date: 1994
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DOI: 10.1080/758540502

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