Bankruptcy risk,firm-specific managerial human capital,and diversification |
| |
Authors: | David C Rose |
| |
Institution: | 1. Department of Economics, University of Missouri-St. Louis, 8001 Natural Bridge Road, 63121, St. Louis, MO, U.S.A.
|
| |
Abstract: | This paper proposes a model in which firm diversification acts as an efficient form of nonpecuniary compensation for the manager. In the model diversification rewards the manager by reducing the likelihood of bankruptcy which in turn increases the expected value of his firm-specific human capital. Unlike the principal-agent model of diversification, this model shows that diversification may be optimal even if the manager is risk neutral and his behavior can be observed by firm owners.I thank Nasser Arshadi, Susan Feigenbaum, David Hakes, Thomas Ireland, Roger Sherman, and Robert Sorensen for their comments and suggestions. |
| |
Keywords: | Diversification bankruptcy |
本文献已被 SpringerLink 等数据库收录! |
|