Week 6-Manager Owner Conflicts - Click to edit Master...

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Unformatted text preview: Click to edit Master subtitle style 2/14/11 Owner-Manager Conflicts October 2nd, 2009 2/14/11 Self-Interest Is the primary objective of decision makers Increases the complexity of decision making in organizations As organization grows, complexity is further increased by the larger number of decision makers 2/14/11 Owner-Manager Incentive Choice of Effort Perquisite Taking Overinvestment Differential Risk Exposure Differential Horizons 2/14/11 Owner-Manager Incentive Choice of Effort Manager chooses how hard to work More effort at work is better for firm, but less utility for manager Perquisite taking Owners want to attract and retain competent managers without 2/14/11 Risky Decisions Actions chosen by manager has potential to result in negative consequences for the company Two Models to predict risk behavior 1. Differential Risk Exposure 2. Differential Horizons 2/14/11 Risk Models Differential Risk Exposure Managers are Risk Adverse...
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This note was uploaded on 02/14/2011 for the course ECON 302 taught by Professor Avrin-rad during the Spring '09 term at University of Illinois, Urbana Champaign.

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Week 6-Manager Owner Conflicts - Click to edit Master...

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