The following paper evaluates a study that was conducted to find out ways which enables large firms to resolve the problem of having managers whose objectives differ from the firm owners.

Business Research Design Assessment Where should decision rights be lodged in organizations? Michael C. Jensen and William H. Meckling (1992) argue that moving a decision away from the inherently best-informed party involves costs in communication and garbling but may lodge it with someone who has better incentives to make good decisions. In large organization, the group of individuals who own the firm are usually separated from those who manage it. This kind of separation results in …showed first 75 words of 1438 total…

…showed last 75 words of 1438 total…In conclusion, managers do not always act in the interest of shareholders. Because larger firms generate larger benefits for managers, they are interested in the firm growing beyond the optimal level. References: Jensen, Michael C. and Meckling, William H. Specific and General Knowledge, and Organizational Structure. Contract Economics. Oxford: Blackwell Publishers, 1992, pp. 251-74. Jo E., Charlie W.. Decision processes, monitoring, incentives and large firm performance in the UK. Management Decision. Gale Group, 1995 v33 n6 p32(7).