NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

The Internal Governance of Firms

Viral V. Acharya, Stewart C. Myers, Raghuram Rajan

NBER Working Paper No. 15568
Issued in December 2009
NBER Program(s):   CF

We develop a model of internal governance where the self-serving actions of top management are limited by the potential reaction of subordinates. Internal governance can mitigate agency problems and ensure that firms have substantial value, even with little or no external governance by investors. External governance, even if crude and uninformed, can complement internal governance and improve efficiency. This leads to a theory of investment and dividend policy, where dividends are paid by self-interested CEOs to maintain a balance between internal and external control.

download in pdf format
   (443 K)

email paper

This paper is available as PDF (443 K) or via email.

This paper was revised on June 26, 2014

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w15568

Published: Viral V. Acharya & Stewart C. Myers & Raghuram G. Rajan, 2011. "The Internal Governance of Firms," Journal of Finance, American Finance Association, vol. 66(3), pages 689-720, 06. citation courtesy of

Users who downloaded this paper also downloaded these:
Bebchuk and Weisbach w15537 The State of Corporate Governance Research
Rajan w17760 The Corporation in Finance
Diamond and Rajan w14739 The Credit Crisis: Conjectures about Causes and Remedies
Malmendier, Tate, and Yan w15659 Overconfidence and Early-life Experiences: The Impact of Managerial Traits on Corporate Financial Policies
Acharya, Shin, and Yorulmazer w15567 Crisis Resolution and Bank Liquidity
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us