Article ID | Journal | Published Year | Pages | File Type |
---|---|---|---|---|
5055869 | Economic Modelling | 2010 | 4 Pages |
Abstract
It's commonly believed that managers with higher ability would be less likely to be taken over. We set out a model, which is built on Zwiebel (1996), to show that there is no monotonic relationship between manager's ability and the probability of being taken over. A manager with relatively high ability would be taken over since this manager cannot commit to renegotiating debt contract with the creditor after taking on a bad project; anticipating this, the raider would take over the firm and remove the high-ability manager in the first place.
Related Topics
Social Sciences and Humanities
Economics, Econometrics and Finance
Economics and Econometrics
Authors
Mingchao Cai, Yue Li, Yongxiang Wang, Rong Xu,