2009
DOI: 10.1111/j.1540-6261.2008.01435.x
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Do Entrenched Managers Pay Their Workers More?

Abstract: Standard-Nutzungsbedingungen:Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden.Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich machen, vertreiben oder anderweitig nutzen.Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, gelten abweichend von diesen Nutzungsbedingungen die in… Show more

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Cited by 370 publications
(192 citation statements)
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References 52 publications
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“…Although we do not explicitly look at the amount spent on wages (due to lack of sufficient data), this result is broadly consistent with Cronqvist et al. (), who find that entrenched managers usually pay workers more to avoid conflicts but that this effect is strongly mitigated if managers have cash flow rights.…”
supporting
confidence: 86%
See 1 more Smart Citation
“…Although we do not explicitly look at the amount spent on wages (due to lack of sufficient data), this result is broadly consistent with Cronqvist et al. (), who find that entrenched managers usually pay workers more to avoid conflicts but that this effect is strongly mitigated if managers have cash flow rights.…”
supporting
confidence: 86%
“…Furthermore, given that running a firm in a cost‐efficient way (reducing overhead and labor costs) requires a lot of effort from managers (Cronqvist et al. ()), our findings suggest that owner‐managers are value‐increasing and thus support an incentive‐based explanation for our main findings. It is probably the case that both—markets not fully understanding the positive incentive effect of ownership on the one hand and investors fully understanding the equilibrium mechanism of the underpricing equilibrium on the other hand—lead to the abnormal returns we document in different situations.…”
Section: Discussionsupporting
confidence: 62%
“…Faleye (2004) shows that entrenched management is insulated from market discipline resulting in significant reduction in firm value. Cronqvist et al. (2007) find that entrenched management pay higher wages to enjoy non‐pecuniary private benefits such as lower effort wage bargaining and improved social relations with managers.…”
Section: Regression Resultsmentioning
confidence: 90%
“… As argued by Williamson (, 1034), “the incentive to expand staff may be difficult to resist. Not only is it an indirect means to the attainment of salary, but it is a source of security, power, status, prestige, and professional achievement as well.” Recent evidence linking agency conflicts with inefficient labor investments can be found in Chen, Lu, and Sougiannis (), Cronqvist, Heyman, Nilsson, Svaleryd, and Vlachos (), and Atanassov and Kim (). …”
mentioning
confidence: 99%