Renegotiation, investment horizons, and managerial discretion
In this article, the authors show that the evolution of managerial entrenchment can distort investment horizons. Both myopic and hypermetropic distortions can arise. The direction of these distortions is determined by the locus of control and their pervasiveness by the degree of management entrenchm...
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| Format: | Journal article |
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1997
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| _version_ | 1797065371459518464 |
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| author | Noe, T Rebello, M |
| author_facet | Noe, T Rebello, M |
| author_sort | Noe, T |
| collection | OXFORD |
| description | In this article, the authors show that the evolution of managerial entrenchment can distort investment horizons. Both myopic and hypermetropic distortions can arise. The direction of these distortions is determined by the locus of control and their pervasiveness by the degree of management entrenchment. Myopic distortions occur when shareholders directly determine investment policy. Hypermetropic distortions occur when management sets investment policy. The inherent hypermetropic bias of managers is mitigated by front-loaded compensation packages and pension plans tied to short-run performance. These distortions in investment horizons may have implications for the allocation of corporate control. |
| first_indexed | 2024-03-06T21:27:42Z |
| format | Journal article |
| id | oxford-uuid:43a5e375-1c92-47bc-b0c4-64f82cbd3c48 |
| institution | University of Oxford |
| last_indexed | 2024-03-06T21:27:42Z |
| publishDate | 1997 |
| record_format | dspace |
| spelling | oxford-uuid:43a5e375-1c92-47bc-b0c4-64f82cbd3c482022-03-26T14:56:41ZRenegotiation, investment horizons, and managerial discretionJournal articlehttp://purl.org/coar/resource_type/c_dcae04bcuuid:43a5e375-1c92-47bc-b0c4-64f82cbd3c48Saïd Business School - Eureka1997Noe, TRebello, MIn this article, the authors show that the evolution of managerial entrenchment can distort investment horizons. Both myopic and hypermetropic distortions can arise. The direction of these distortions is determined by the locus of control and their pervasiveness by the degree of management entrenchment. Myopic distortions occur when shareholders directly determine investment policy. Hypermetropic distortions occur when management sets investment policy. The inherent hypermetropic bias of managers is mitigated by front-loaded compensation packages and pension plans tied to short-run performance. These distortions in investment horizons may have implications for the allocation of corporate control. |
| spellingShingle | Noe, T Rebello, M Renegotiation, investment horizons, and managerial discretion |
| title | Renegotiation, investment horizons, and managerial discretion |
| title_full | Renegotiation, investment horizons, and managerial discretion |
| title_fullStr | Renegotiation, investment horizons, and managerial discretion |
| title_full_unstemmed | Renegotiation, investment horizons, and managerial discretion |
| title_short | Renegotiation, investment horizons, and managerial discretion |
| title_sort | renegotiation investment horizons and managerial discretion |
| work_keys_str_mv | AT noet renegotiationinvestmenthorizonsandmanagerialdiscretion AT rebellom renegotiationinvestmenthorizonsandmanagerialdiscretion |