Scharfstein, David S.; Stein, Jeremy C. - In: Journal of Finance 55 (2000) 6, pp. 2537-2564
We develop a two-tiered agency model that shows how rent-seeking behavior on the part of division managers can subvert the workings of an internal capital market. By rent-seeking, division managers can raise their bargaining power and extract greater overall compensation from the CEO. And...