Enjoying the Quiet Life? Corporate Governance and Managerial Preferences

Marianne Bertrand and Sendhil Mullainathan

Journal of Political Economy, 2003, vol. 111, issue 5, 1043-1075

Abstract: Much of our understanding of corporations builds on the idea that managers, when they are not closely monitored, will pursue goals that are not in shareholders' interests. But what goals would managers pursue? This paper uses variation in corporate governance generated by state adoption of antitakeover laws to empirically map out managerial preferences. We use plant-level data and exploit a unique feature of corporate law that allows us to deal with possible biases associated with the timing of the laws. We find that when managers are insulated from takeovers, worker wages (especially those of white-collar workers) rise. The destruction of old plants falls, but the creation of new plants also falls. Finally, overall productivity and profitability decline in response to these laws. Our results suggest that active empire building may not be the norm and that managers may instead prefer to enjoy the quiet life.

Date: 2003
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1265)

Downloads: (external link)
http://dx.doi.org/10.1086/376950 main text (application/pdf)
Access to the online full text or PDF requires a subscription.

Related works:
Working Paper: Enjoying the Quiet Life? Corporate Governance and Managerial Preferences (2003)
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:ucp:jpolec:v:111:y:2003:i:5:p:1043-1075

Access Statistics for this article

More articles in Journal of Political Economy from University of Chicago Press
Bibliographic data for series maintained by Journals Division ().