TY  - JOUR
AU  - Novaes,Walter
AU  - Zingales,Luigi
TI  - Bureaucracy as a Mechanism to Generate Information
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 9763
PY  - 2003
Y2  - June 2003
UR  - http://www.nber.org/papers/w9763
L1  - http://www.nber.org/papers/w9763.pdf
N1  - Author contact info:
Walter Novaes
PUC-Rio
E-Mail: novaes@econ.puc-rio.br

Luigi Zingales
Booth School of Business
The University of Chicago
5807 S. Woodlawn Avenue
Chicago, IL 60637
Tel: 773/702-3196
Fax: 773/834-2081
E-Mail: luigi.zingales@ChicagoBooth.edu
AB  - Firms that maintain no formal record of actions and events would hardly be considered well managed. Yet, organizations that require the recording of actions and the filing of reports are often labeled  bureaucratic' and inefficient. This paper argues that the thin line between efficient management practices and inefficient bureaucracy is crossed to curb managerial agency costs in a multi-layer hierarchy. The model predicts that bureaucracy increases with the frequency of managerial turnover, and it establishes a link between bureaucracy, incentive schemes, and leverage in a cross-section of firms.
ER  -