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Publications
Publications
  • January 2006
  • Article
  • Journal of Financial Economics

Are Perks Purely Managerial Excess?

By: Raghuram G. Rajan and Julie Wulf
  • Format:Print
  • | Pages:33
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Abstract

A widespread view is that executive perks exemplify agency problems--they are a route through which managers misappropriate a firm's surplus. Accordingly, firms with high free cash flow, operating in industries with limited investment prospects, should offer more perks, and firms subject to more external monitoring should offer fewer perks. The evidence for agency as an explanation of perks is, at best, mixed. Perks are, however, offered in situations in which they enhance managerial productivity. While we cannot rule out the occasional aberration, and while we have little to say on the overall level of perks, our findings suggest that treating perks purely as managerial excess is incorrect.

Keywords

Problems and Challenges; Cash Flow; Business or Company Management; Situation or Environment; Performance Productivity; Investment; Executive Compensation

Citation

Rajan, Raghuram G., and Julie Wulf. "Are Perks Purely Managerial Excess?" Journal of Financial Economics 79, no. 1 (January 2006): 1–33. (Winner of the Second Place 2006 Jensen Prize for "Best Paper on Corporate Finance and Organizations" presented by Journal of Financial Economics .)
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More from the Authors

    • April 2014
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    Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management

    By: Maria Guadalupe, Hongyi Li and Julie Wulf
    • 2014
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    Pay Harmony: Peer Comparison and Executive Compensation

    By: Claudine Gartenberg and Julie Wulf
    • Fall 2012
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    The Flattening Firm—Not As Advertised

    By: Julie Wulf
More from the Authors
  • Who Lives in the C-Suite? Organizational Structure and the Division of Labor in Top Management By: Maria Guadalupe, Hongyi Li and Julie Wulf
  • Pay Harmony: Peer Comparison and Executive Compensation By: Claudine Gartenberg and Julie Wulf
  • The Flattening Firm—Not As Advertised By: Julie Wulf
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