Managerial and windfall rents in the market for corporate control

Abstract

This paper examines the role of the top competent management team in generating firm and managerial rents, and draws implications for the market for corporate control. The analysis suggests that superior top managers have inherent incentives to act efficiently, and that the potential for conflict between manager and stockholder interests may be less than is often presumed. Rent-seeking behavior in the market for corporate control and its consequences are examined.