Should Owners of Firms Delegate Long-run Decisions?

• Autores: Juan Carlos Bárcena Ruiz, Francisco Javier Casado Izaga
• Localización: Documentos de Trabajo BILTOKI, ISSN-e 1134-8984, Nº. 11, 1999
• Idioma: inglés
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• Resumen

  • This paper analyzes whether owners of firms have incentives to delegate their long-run decisions to managers or not. The result arising from our analysis shows that owners do have incentives to keep their long-run decisions (the location of the firm) to themselves. In this context we show that the delegation of short-run decisions (prices) to the managers leads to an increase in the degree of product differentiation with regard to the case in which firms do not hire managers.