Bebchuk and Fried's managerial power theory states that:

Question

Quizplus · Accepted Answer

Bebchuk and Fried's managerial power theory suggests that market forces such as product, labor, and takeover markets can help limit executive pay, but they are not perfect mechanisms. This implies that executive compensation can be influenced by managerial power in some cases. The theory does not suggest that all firms have the same quality of governance or that managers necessarily want performance-based pay. It also does not explicitly claim that the typical corporate board is or is not captured by managers.

Bebchuk and Fried's Managerial Power Theory States That