CORPORATE RENT – SEEKING AND THE MANAGERIAL SOFT – BUDGET CONSTRAINT AN INCREMENTAL CASH FLOW APPROACH TO SOME CORPORATE GOVERNANCE ISSUES

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Abstract

This paper seeks to expand on two topical strands in Government Finance and Political Science literature, rent-seeking and the soft-budget constraint, so as to bring forth a strong linkage with corporate governance environments. It will attempt to accomplish this task by setting up a distinctive framework of analysis that hinges on incremental cash flows. Firstly, it claims that both rent-seeking behavior and the soft-budget constraint are worthy of being applied to corporate governance learning and practice. Secondly, the paper contributes to focus on cash-flows reliability and managers’ accountability. Thirdly, it is shown how conflicts of interest underlie rent-seeking behavior, and how the latter relates to the soft-budget constraint.

Keywords: Rent-Seeking, Soft-Budget Constraint, Corporate Governance, Incremental Cash Flow Model, Conflicts of Interest

How to cite this paper: Apreda, R. (2004). Corporate rent-seeking and the managerial soft – budget constraint an incremental cash flow approach to some corporate governance issues. Corporate Ownership & Control, 2(2), 20-27. https://doi.org/10.22495/cocv2i2p2