Corporate Perks

A closely related, though smaller, problem is that managers disproportionately enjoy spending money on perks. A public company may buy a corporate airplane that costs $100 million and increases productivity by the equivalent of $10 million—just because it gives managers $1 million worth of pleasure. Plush corporate headquarters and fleets of corporate aircraft are usually sure signs of publicly traded companies, especially in slow-growth industries.

Perks are goodies that managers have the firm buy for themselves.

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