Managerial tenure under private and government ownership: the case of higher education

The present paper offers statistical evidence which suggests that managers of firms in the higher education industry in the United States (universitie s and colleges) pursue a variety of goals consistent with economic theory i n the context of firm ownership, and that the tenure of managers (universit y/college Presidents) in this industry differs according to the firm's orga nizational structure (public vs, private). The essentially non-transferable property rights (regarding government-owned firms) reduce incentives to po lice and detect managerial (in)efficiencies. Managers, therefore, face ince ntives to create internal decision-making processes which increase job secu rity and tenure, along with other nonpecuniary sources of income and utilit y. Empirical results presented here point out that, ceteris paribus, the av erage tenure of public university presidents is about five years longer tha n their private counterparts, as a result of the disparity in incentive str uctures. [JEL D23, 121, 122, L33] (C) 1998 Elsevier Science Ltd. All rights reserved.