Essay about Managerial Empire Building Critique

1248 Words May 28th, 2011 5 Pages
Management Accounting Essay Critique

Managerial Empire Building, Corporate Governance, and the Asymmetrical Behavior of Selling, General, and Administrative Costs


Management Accounting Essay Critique

Main aim of essay critique is to evaluate the results of the research paper The main aim of this essay critique is to evaluate some of the results between corporate governance and the asymmetrical behavior of cost, namely selling, general and administrative (SG&A). It will also discuss pertinent points concerning corporate governance and the limitations of this study.

There are a few important findings in this paper The purpose of this research paper is to examine whether managerial incentive is an additional explanation from
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However, their interests may not be aligned with the managers. After reaching a certain level of performance,


Management Accounting Essay Critique

managers might lose incentive to develop the company to its fullest. They could start adopting a different agenda; for instance, achieve a work-life balance, emphasis on managers’ perks and etc. I personally do not foresee this dilemma being solved in the near future. Managers’ salaries probably would have a fixed portion and a variable component. This variable component would be pegged to the performance of the company. So shouldn’t managers have incentives to lower the increase in SG&A costs when revenue rises? My take is that monetary incentive has its seduction limitation. As a manager, I know that if I can control the company’s income better, I would make more money. However, after reaching a certain echelon, I would be already very comfortable and value the opportunity cost of the time spent to control the expenses more. I would value work-life balance, and since I am stressing myself for the company, I am certainly entitled to some perks and benefits. This is especially so if the company is not faring well, and I am under a lot of pressure to boast the company’s performance. This I believe could be another reason to why costs are sticky.

Managers need to have a sense of belonging to the company I might sound altruistic saying this, but it is possible to thwart

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