Bebchuk and Fried's managerial power theory states that:

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Bebchuk and Fried's managerial power theory argues that while product, labor, and takeover markets may help to limit executive pay, these mechanisms do not work perfectly. This suggests that there can be significant disparities in the quality of governance among different firms, with some being more prone to managerial entrenchment and excessive executive compensation than others. Additionally, the theory underscores the importance of understanding the ways in which managers can use their power to influence corporate decision-making and extract rents from the firm. Overall, the theory offers a nuanced perspective on the governance challenges faced by modern corporations.

Bebchuk and Fried's Managerial Power Theory States That