Delegation and Limited Liability in a Modern Capitalistic Economy

We examine an effect of limited liability on strategic delegation in a Cournot duopoly with demand uncertainty. We establish that owners of each firm always delegate their tasks, decisions, and responsibility to a manager under limited liability, while they do not always do so under unlimited liability. This result is consistent with the fact that separation of ownership and management as well as limited liability prevail in many modern large companies.

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Year of publication:	2012-04
Authors:	Shinkai, Tetsuya ; Ohkawa, Takao ; Okamura, Makoto ; Harimaya, Kozo
Institutions:	School of Economics, Kwansei Gakuin University
Subject:	limited liability \| delegation \| managerial incentives \| and Cournot duopoly

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Extent:	application/pdf
Series:	Discussion Paper Series.
Type of publication:	Book / Working Paper
Notes:	Number 87 33 pages
Classification:	G32 - Financing Policy; Capital and Ownership Structure ; L13 - Oligopoly and Other Imperfect Markets ; L12 - Monopoly; Monopolization Strategies
Source:	RePEc - Research Papers in Economics

Persistent link: https://www.econbiz.de/10010540937