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Socialism and Intrafirm Asset Allocation
Author(s) -
Joerg Petra,
Loderer Claudio,
Roth Lukas
Publication year - 2005
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/j.1354-7798.2005.00279.x
Subject(s) - reputation , position (finance) , socialism , shareholder , optimism , asset (computer security) , business , economics , microeconomics , market economy , finance , corporate governance , political science , law , psychology , social psychology , communism , computer security , politics , computer science
We rely on a survey of Swiss firms to document deviation from first‐best for reasons of internal ‘fairness’ when allocating resources. This ‘socialist’ practice is more widespread in smaller than in larger firms. It ignores the reputation and past performance of the managers who apply for funding, but takes into account their hierarchical position and their past use of resources. Socialism is only partially explained by concerns about empire building and managerial optimism, and it is not meant to benefit shareholders .