Managerial innovation incentives, management buyouts, and shareholders' intolerance of failure

Research output: Contribution to journalArticlepeer-review

8 Citations (Scopus)

Abstract

This study demonstrates that, apart from managerial agency problem, shareholders' intolerance of failure also deteriorates managerial innovation incentives in public firms. Furthermore, management buyouts improve the innovation intensity, even if managers gain no excess value from the buyouts in collaboration with private equity firms. The study provides insights into the interrelation between firms' innovation, corporate governance, and dividend policy. It presents a rationale behind empirical evidence of a positive relationship between management buyouts and innovation intensity. It provides empirical implications on firms' characteristics that facilitate management buyouts and the return and risk structure of private equity firms.

Original languageEnglish
Pages (from-to)55-74
Number of pages20
JournalJournal of Corporate Finance
Volume42
DOIs
Publication statusPublished - 2017 Feb 1
Externally publishedYes

Keywords

  • Corporate governance
  • Innovation
  • Investors' sophistication
  • Management buyouts
  • Managerial opportunism

ASJC Scopus subject areas

  • Business and International Management
  • Finance
  • Economics and Econometrics
  • Strategy and Management

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