Markets have a remarkable capacity for producing efficient resource allocations when information about relative values is dispersed across economic agents. We explore the use of market mechanisms inside the firm to address a resource allocation problem, and compare the outcome with the first-...

This paper empirically examines how changes in the hierarchical structure of a large organization can affect incentives. The empirical analysis exploits a change in the hierarchical structure of the Corporate Division of a private foreign commercial bank in Argentina between 1999 and 2001. Using...

Vertical integration is often proposed as a way to resolve hold-up problems, ignoring the empirical fact that division managers tend to maximize divisional (not firmwide) profit when investing. This paper develops a model with asymmetric information at the bargaining stage and investment returns...

In this chapter, we review the use of TCE in the study of interfirm relationships. An extensive literature in economics and business strategy delves into interfirm governance choices. In our review, we focus on accounting and non-accounting studies to assess how TCE has contributed and can...

This paper reviews and proposes additional research concerning the role of publicly reported financial accounting information in the governance processes of corporations. We first review and analyze research on the use of financial accounting measures in managerial incentive plans and explore...

Vertical integration is often proposed as a way to resolve hold-up problems in connection with specific investments. However, decision-makers are generally compensated based on divisional (not firm-wide) profit. Hence, hold-up problems are bound to resurface in integrated firms. This paper...

We construct a measure of the pairwise relatedness of firms' human capital to examine whether human capital relatedness is a key factor in mergers and acquisitions. We find that mergers are more likely and merger returns and post-merger performance are higher when firms have related human...

This is the Online Appendix to accompany the paper "Human Capital Relatedness and Mergers and Acquisitions". This appendix contains additional results that are referred to but not contained in the paper.Original paper available at: 'https://ssrn.com/abstract=2996878'...

Demand complementarity emerges when the outputs of firms from distinct industries are used by similar end-users. This paper constructs a measure of the pairwise demand complementarity of firms and examines whether demand complementarity is a key determinant in mergers and acquisitions. Under our...

This paper examines whether and for how long managers' initial assessments of employee ability influence promotion decisions. Using archival data from minor league professional baseball, we find that, controlling for performance, initial assessments are associated with promotion decisions for at...