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Management cycles

Author

Listed:
  • Shingo Ishiguro

    (Osaka University)

Abstract

In this study, we present a dynamic theory of management cycles under which firms endogenously switch between management regimes with different levels of profitability over time. Firms accumulate managerial capital as intangible assets such as managerial knowledge, know-how, and skills over time subject to limited contract enforcement. We show that the current managers of a firm are disciplined by not only the managerial capital accumulated through past business operations but also the market valuation of the future profitability of the firm. Through such dynamic interactions, we show that management cycles endogenously emerge and persist over time.

Suggested Citation

  • Shingo Ishiguro, 2022. "Management cycles," Economic Theory, Springer;Society for the Advancement of Economic Theory (SAET), vol. 73(1), pages 257-300, February.
    • Handle: RePEc:spr:joecth:v:73:y:2022:i:1:d:10.1007_s00199-020-01337-2
    DOI: 10.1007/s00199-020-01337-2
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    More about this item

    Keywords

    Dynamic enforcement; Managerial capital; Moral hazard;
    All these keywords.

    JEL classification:

    • D21 - Microeconomics - - Production and Organizations - - - Firm Behavior: Theory
    • D86 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Economics of Contract Law
    • M21 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Business Economics - - - Business Economics

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