What motivates managers? [An article from: Journal of Corporate Finance]

This digital document is a journal article from Journal of Corporate Finance, published by Elsevier in . The article is delivered in HTML format and is available in your Amazon.com Media Library immediately after purchase. You can view it with any web browser.

Description:
We formulate and test several hypotheses on managerial motivation using organizational form changes in the real estate industry. We find that firms that switch to a more restrictive structure have increases in stock value and managerial ownership. Firms moving to a less restrictive structure have larger wealth effects when higher monitoring exists. Higher degree of financial distress and forced CEO replacement at the time of organizational form change are taken to be proxies for higher degree of (creditor) monitoring. The wealth effects are decreasing in the firm's level of free cash flow at the time of organizational form change.