search query: @indexterm rent-seeking / total: 8
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| Author: | Scharfstein, D. S. Stein, J. C. |
| Title: | The dark side of internal capital markets: divisional rent-seeking and inefficient investment |
| Journal: | Journal of Finance
2000 : DEC, VOL. 55:6, p. 2537-2564 |
| Index terms: | Capital markets Rent-seeking Investment |
| Language: | eng |
| Abstract: | The authors develop a two-tiered agency model that shows how rent-seeking behavior on the part of division managers can subvert the workings of an internal capital market. By rent-seeking, division managers can raise their bargaining power and extract greater overall compensation from the CEO. The model implies a kind of "socialism" in internal capital allocation, wherby weaaker divisions get subsidized by stronger ones. |
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