Page info: *Author: Mathiesen, H. *Document version: 2.6. *Copyright 1997-2019, H. Mathiesen. Legal notice. 


Table: Hypotheses - Effects of market for management services on performance and other incentive mechanisms in corporate governance


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9) From market for management services to corporate performance

9A: The presence of a well functioning market for management services may deter managers from running the firm below its performance potential since that would make it more likely that they would loose their jobs to other and more performance dedicated managers (Fama [1980]).


18) From market for management services to incentive based compensation

18A: A perfect market for management services should be able to determine the optimal management remuneration. For instance, on one hand, the managers would get at least the remuneration that would prevent them from taking a job at another firm (the so called reservation salary) and, on the other hand, they would not be able to get any more compensation than an equally good alternative management team would demand.


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