- Economics of Governance Journal
- September 2016
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- When faced with the replacement threat, incumbent managers look for support from employees by investing in a non-contractible employee-friendly relationship. Enjoying the relationship, employees help managers preserve their job by protesting against shareholders. When the benefits from the good employee-manager relationship are large enough to cover the loss of managerial inefficiency, shareholders prefer to share the influential power at the firm with employees.
- corporate governance; manager replacement; non-contractable relationship investment; employee protest; power sharing; governance; authority