Quarterly Journal of Economics articles from November 1994

Quarterly Journal of Economics archives from November 1994

The firm as a communication network.
November 1, 1994... I. INTRODUCTION This paper is concerned with the organization of administration, clerical work, and production inside firms. The internal organization of firms is seen as a communication network that is designed to minimize both the costs of...

A theory of debt based on the inalienability of human capital.
November 1, 1994... I. INTRODUCTION Consider an entrepreneur who has access to a profitable investment project, but does not have the funds to finance it. In an ideal world the entrepreneur would raise the capital from an outside investor (e.g., a bank),...

The internal economics of the firm: evidence from personnel data.
November 1, 1994... INTRODUCTION There is a large and growing interest in the economic theory of the internal workings of firms. However, this literature is based on very little data and limited stylized facts. Personnel data can bridge this gap. Virtually all...

The wage policy of a firm.
November 1, 1994... INTRODUCTION How do firms set wages for their employees? The evidence on this matter is surprisingly impressionistic. Textbooks on human resource management (e.g., Milkovich and Newman [1987]) go into substantial detail about wage policies,...

Efficient and inefficient sales of corporate control.
November 1, 1994... I. INTRODUCTION The economic significance of transactions that transfer corporate control is now widely recognized. This paper focuses on an important set of control-shifting transactions--those in which a controlling interest in a corporation...

Politicians and firms.
November 1, 1994... I. INTRODUCTION Economists traditionally view public enterprises as curing market failures [Atkinson and Stiglitz 1980]. Public enterprises are controlled by governments maximizing social welfare, and improve on the decisions of private...

A theory of debt and equity: diversity of securities and manager-shareholder congruence.
November 1, 1994... I. INTRODUCTION This paper presents a theory of the capital structure of firms. A rich literature exists on the topic, following the irrelevance result of Modigliani and Miller. While this literature has generated numerous insights on the...

Short-term versus long-term interests: capital structure with multiple investors.
November 1, 1994... I. INTRODUCTION Most firms have more than one investor and issue more than one type of financial claim. These claims differ, among other things, in maturity, payout contingencies, security interests, and priority in bankruptcy. Investors...

Incomplete written contracts: undescribable states of nature.
November 1, 1994... I. INTRODUCTION I.1. Overview Many contracts specifying state-contingent outcomes that economic agents write to regulate their transactions are incomplete. They neglect information about the state of the world that is in principle available...

Subjective performance measures in optimal incentive contracts.
November 1, 1994... I. INTRODUCTION I.A. Motivation Business history is littered with firms that got what they paid for. At the H. J. Heinz Company, for example, division managers received bonuses only if earnings increased from the prior year. The managers...

The dynamics of learning with team production: implications for task assignment.
November 1, 1994... I. INTRODUCTION In many organizations, production occurs in teams involving individuals at different levels in the hierarchy. Case teams at law firms are usually staffed by junior associates, senior associates, and partners, and a similar...

The management of innovation.
November 1, 1994... I. INTRODUCTION A feature common to the patent race and the endogenous growth literatures is their simplified representation of R&D activities, which are assumed to be performed by an aggregate agent playing simultaneously the roles of...

Internal versus external capital markets.
November 1, 1994... A central goal of research in corporate finance is to understand the process by which capital is allocated to the corporate sector. In most work, the focus is on providers of capital that are external to the firm, e.g., the bond market, the stock...