The Internal Governance of Firms
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Myers_The internal.pdf
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692.21 KB
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373d74d6dba6e9fdd0b6ee34da549db8
Author(s)
Acharya, Viral V.
Myers, Stewart C.
Rajan, Raghuram G.
Date Issued
June 2011
Journal
Journal of Finance
Publisher
John Wiley & Sons, Inc
Citation
Acharya, Viral V., Stewart C. Myers, and Raghuram G. Rajan. “The Internal Governance of Firms.” The Journal of Finance 66, no. 3 (June 2011): 689–720.
Version
Author's final manuscript
Abstract
We develop a model of internal governance where the self-serving actions of top management are limited by the potential reaction of subordinates. Internal governance can mitigate agency problems and ensure that firms have substantial value, even with little or no external governance by investors. External governance, even if crude and uninformed, can complement internal governance and improve efficiency. This leads to a theory of investment and dividend policy, in which dividends are paid by self-interested CEOs to maintain a balance between internal and external control.
MIT Department
Sloan School of Management
Terms of Use
Creative Commons Attribution-Noncommercial-Share Alike
Persistent DSpace Link
DOI of Published Version
https://doi.org/10.1111/j.1540-6261.2011.01649.x
