TY  - JOUR
AU  - Rajan,Raghuram
AU  - Wulf,Julie
TI  - Are Perks Purely Managerial Excess?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10494
PY  - 2004
Y2  - May 2004
UR  - http://www.nber.org/papers/w10494
L1  - http://www.nber.org/papers/w10494.pdf
N1  - Author contact info:
Raghuram Rajan
Booth School of Business
University of Chicago
5807 South Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-4437
Fax: 773/702-0458
E-Mail: raghuram.rajan@ChicagoBooth.edu

Julie Wulf
Harvard Business School
Morgan Hall 241, Soldiers Field Road
Boston, MA 02163
Tel: 617-495-8542
Fax: 617-495-0355
E-Mail: jwulf@hbs.edu
AB  - Why do some firms tend to offer executives a variety of perks while others offer none at all? A widespread view in the corporate finance literature is that executive perks are a form of agency or private benefit and a way for managers to misappropriate some of the surplus the firm generates. According to this view, firms with plenty of free cash flow that operate in industries with limited investment prospects should typically offer perks. The theory also suggests that firms that are subject to more external monitoring should have fewer perks. Overall, the evidence for the private benefits explanation is, at best, mixed. We do, however, find evidence that perks are offered most in situations where they are likely to enhance managerial productivity. This suggests that a view of perks that sees them purely as managerial excess is incorrect.
ER  -