Incentives, Capital Budgeting, and Organizational Structure

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dc.contributor.author Motta, Adolfo de
dc.contributor.author Ortega Diego, Jaime
dc.date.accessioned 2015-04-17T10:32:31Z
dc.date.available 2015-12-01T23:00:07Z
dc.date.issued 2013-12
dc.identifier.bibliographicCitation Journal of Economics & Management Strategy (2013). 22(4), 810-831.
dc.identifier.issn 1530-9134 (online)
dc.identifier.issn 1058-6407 (print)
dc.identifier.uri http://hdl.handle.net/10016/20445
dc.description.abstract Divisional managers compete for financial resources in what is often referred to as an internal capital market. They also have a common interest in maximizing corporate profits, as this determines the resources available to the firm as a whole. Both goals are powerful motivators but can at times conflict: while the amount of resources available to the firm depends on corporate performance, divisional funding depends upon the division's performance relative to the rest. We propose a model in which organizational form is endogenous, divisions compete for corporate resources, and managers have implicit incentives. We show that organizational design can help companies influence their divisional managers' potentially conflicting goals. Our analysis relates the firm's organizational structure to the source of incentives (external vs. internal), the nature of the incentives (competition vs. cooperation), the level of corporate diversification, the development of the capital market, and to industry and firm characteristics.
dc.description.sponsorship Spanish Ministry of Science and Innovation (research grants ECO2009-08278 and ECO2012-33308) and the Community of Madrid (research grant S2007/HUM-0413).
dc.format.extent 22
dc.format.mimetype application/pdf
dc.language.iso eng
dc.publisher Wiley
dc.rights © 2013 Wiley Periodicals, Inc.
dc.subject.other Free Cash Flow
dc.subject.other Career Concerns
dc.subject.other Corparate Resources
dc.subject.other Managerial Incentives
dc.subject.other Form
dc.subject.other Allocation
dc.subject.other Markets
dc.subject.other Desing
dc.subject.other Firms
dc.subject.other Information
dc.title Incentives, Capital Budgeting, and Organizational Structure
dc.type article
dc.relation.publisherversion http://dx.doi.org/10.1111/jems.12033
dc.subject.eciencia Economía
dc.identifier.doi 10.1111/jems.12033
dc.rights.accessRights openAccess
dc.relation.projectID Gobierno de España. ECO2012-33308
dc.relation.projectID Gobierno de España. ECO2009-08278
dc.type.version acceptedVersion
dc.identifier.publicationfirstpage 810
dc.identifier.publicationissue 4
dc.identifier.publicationlastpage 831
dc.identifier.publicationtitle Journal of economics and management strategy
dc.identifier.publicationvolume 22
dc.identifier.uxxi AR/0000014413
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