Promotion Tournaments and Capital Rationing

• 成果类型: Article
• 署名作者: Han, Bing; Hirshleifer, David; Persons, John C.
• 署名单位: University System of Ohio; Ohio State University; University of California System; University of California Irvine; University of Texas System; University of Texas Austin
• 刊物名称: REVIEW OF FINANCIAL STUDIES
• ISSN/ISSBN: 0893-9454
• DOI: 10.1093/rfs/hhn085
• 发表日期: 2009
• 页码: 219
• 关键词: INEFFICIENT INVESTMENT; incentives; MARKETS; INFORMATION; allocation; CONTRACTS; COSTS; FIRMS

摘要

We analyze capital allocation in a conglomerate where divisional managers with uncertain abilities compete for promotion to CEO. A manager can sometimes gain by unobservably adding variance to divisional performance. Capital rationing can limit this distortion, increase productive efficiency, and allow the owner to make more accurate promotion decisions. Firms for which CEO talent is more important for firm performance are more likely to ration capital. A rationed manager is more likely to be promoted even though all managers are identical ex ante. When the tournament payoff is relatively small, offering an incentive wage can be more efficient than rationing capital; however, when tournament incentives are paramount, rationing is more efficient.