Template-Type: ReDIF-Paper 1.0
Title: The Benefit and Cost of Winner Picking: Redistribution Vs Incentives
Author-Name: Axel Gautier
Author-Name: Florian Heider
Author-Email: 
Classification-JEL: G31, G34, L23
Keywords: Conglomerate, Internal capital market
Abstract: The Benefit and Cost of Winner Picking: Redistribution Vs Incentives |AB| A multi-divisional firm can engage in "winner-picking" to redistribute scarce funds 
	efficiently across divisions. But there is a conflict between rewarding winners (investing) and producing resources internally to reward winners (incentives). 
	Managers in winning divisions are tempted to free-ride on resources produced by managers in loosing divisions whose incentives to produce resources, 
	anticipating their loss, are also weakened. Corporate headquarter's investment and incentive policy are therefore inextricably linked and have to be treated as 
	jointly endogenous. The analysis links corporate strategy, compensation and the value of diversification to the characteristics of multi-divisional firms. 
Note: 
Length: 39
Creation-Date: 2002-11	
Revision-Date: 
File-URL: http://www.wiwi.uni-bonn.de/bgsepapers/bonedp/bgse31_2002.pdf
File-Format: application/pdf
Handle: RePEc:bon:bonedp:bgse31_2002