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| Author: | Joerg, P. Loderer, C. Roth, L. |
| Title: | Socialism and intrafirm asset allocation |
| Journal: | European Financial Management
2005 : MAR, VOL. 11:2, p. 133-152 |
| Index terms: | Capital budgeting Company performance Corporate finance Switzerland |
| Language: | eng |
| Abstract: | This article is based on a survey of Swiss firms. The writers document deviation from first-best for reasons of internal fairness when allocating resources. This 'socialist' practise is more common in smaller than in larger companies. It ignores managers' reputation and past performance, but takes into account their hierarchial position and their past use of resources. Socialism is only partially explained by concerns about managerial optimism and empire building, and it is not meant to benefit shareholders. |
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