Managerial Incentives and Internal Capital Markets
分析多部门公司资本预算中，外部市场评估与总部监督如何影响部门经理的搭便车行为，以及内部资本市场如何替代外部市场提供激励。
Abstract Capital budgeting in multidivisional firms depends on the external assessment of the whole firm, as well as on headquarters' assessment of the divisions. While corporate headquarters may create value by directly monitoring divisions, the external assessment of the firm is a public good for division managers who, consequently, are tempted to free ride. As the number of divisions increases, the free‐rider problem is aggravated, and internal capital markets substitute for external capital markets in the provision of managerial incentives. The analysis relates the value of diversification to characteristics of the firm, the industry, and the capital market.