TY  - JOUR
AU  - Ikeda,, Naoshi
AU  - Inoue, Kotaro
AU  - Watanabe, Sho
TI  - Enjoying the Quiet Life: Corporate Decision-Making by Entrenched Managers
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 23804
PY  - 2017
Y2  - September 2017
DO  - 10.3386/w23804
UR  - http://www.nber.org/papers/w23804
L1  - http://www.nber.org/papers/w23804.pdf
N1  - Author contact info:
Naoshi Ikeda
Tokyo Institute of Technology
2-12-1, W9-49, Ookayama, 
Tokyo, 152-8552
Japan
E-Mail: ikeda.n.ab@m.titech.ac.jp

Kotaro Inoue
Tokyo Institute of Technology
2-12-1, W9-49, Ookayama 
Tokyo, 152-8552 
Japan
E-Mail: inoue.k.aq@m.titech.ac.jp

Sho Watanabe
Tokyo Institute of Technology
2-12-1, W9-49, Ookayama
Tokyo, 152-8552
Japan
E-Mail: satlusw1@gmail.com
M1  - published as Naoshi Ikeda, Kotaro Inoue, Sho Watanabe. "Enjoying the Quiet Life: Corporate Decision-making by Entrenched Managers," in Franklin Allen, Shin-ichi Fukuda, Takeo Hoshi, organizers, "Corporate Governance (NBER-TCER-CEPR Conference)" Elsevier, Journal of the Japanese and International Economies, volume 47 (2018)

M3  - presented at "26th NBER-TCER-CEPR ", June 22, 2017
AB  - In this study, we empirically test “quiet life hypothesis,” which predicts that managers who are subject to weak monitoring from the shareholders avoid making difficult decisions such as risky investment and business restructuring with Japanese firm data. We employ cross-shareholder and stable shareholder ownership as the proxy variables of the strength of a manager’s defense against market disciplinary power. We examine the effect of the proxy variables on manager-enacted corporate behaviors and the results indicate that entrenched managers who are insulated from disciplinary power of stock market avoid making difficult decisions such as large investments and business restructures. However, when managers are closely monitored by institutional investors and independent directors, they tend to be active in making difficult decisions. Taken together, our results are consistent with managerial quiet life hypothesis.
ER  -