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Why Should the Boss Own the Assets?
Author(s) -
Wernerfelt Birger
Publication year - 2002
Publication title -
journal of economics and management strategy
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.672
H-Index - 68
eISSN - 1530-9134
pISSN - 1058-6407
DOI - 10.1111/j.1430-9134.2002.00473.x
Subject(s) - boss , asset (computer security) , context (archaeology) , depreciation (economics) , productivity , argument (complex analysis) , power (physics) , economics , microeconomics , computer science , macroeconomics , engineering , mechanical engineering , profit (economics) , paleontology , biochemistry , chemistry , physics , computer security , quantum mechanics , financial capital , capital formation , biology
In the context of an employment relationship, I present an argument suggesting that it is more efficient for the boss to own the productive assets. The idea is that a conflict between productivity and depreciation is internalized if the player deciding what an asset is used for also has residual claims. An empirical test finds evidence consistent with this. By asking whether the boss should own the assets, the paper reverses the reasoning from the literature in which it is argued that the owner has power and thus is the boss.