Journal of Corporate Finance Vol. 42 2017
Managerial innovation incentives, management buyouts, and shareholders' intolerance of failure
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.
- DOI
- 10.1016/j.jcorpfin.2016.11.002
- Volume
- 42
- Pages
- 55-74
- Language
- en
- Sources
- bibtex:phds-export.bib openalex crossref