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An important aspect of corporate governance is the assessment of managers. When managers vary in ability, determining who is good and who is not is vital. Moreover, knowing they will be assessed can lead those being assessed to behave in ways that make them appear better. Such signal-jamming...
Persistent link: https://www.econbiz.de/10012948072
Economics has firms maximizing value and people maximizing utility, but firms are run by people. Agency theory concerns the mitigation of this internal contradiction in capitalism. Firms need charters, regulations and laws to restrain those entrusted with their governance, just as economies need...
Persistent link: https://www.econbiz.de/10013136737
We develop a model of internal governance where the self-serving actions of top management are limited by the potential reaction of subordinates. Internal governance can mitigate agency problems and ensure that firms have substantial value, even with little or no external governance by...
Persistent link: https://www.econbiz.de/10013149975
Managers' incentives may conflict with those of shareholders or creditors, particularly at leveraged, opaque banks. Bankers may abuse their control rights to give themselves excessive salaries, favored access to credit, or to take excessive risks that benefit themselves at the expense of...
Persistent link: https://www.econbiz.de/10013060693
The bulk of corporate governance theory examines the agency problems that arise from two extreme ownership structures: 100 percent small shareholders or one large, controlling owner combined with small shareholders. In this paper, we question the empirical validity of this dichotomy. In fact,...
Persistent link: https://www.econbiz.de/10012760554
This paper examines common arrangements for separating control from cash flow rights: stock pyramids, cross-ownership structures, and dual class equity structures. We describe the ways in which such arrangements enable a controlling shareholder or group to maintain a complete lock on the control...
Persistent link: https://www.econbiz.de/10012763575
Firms are more complicated than standard principal-agent theory allows: firms have assets-in-place; firms endure through time, allowing for the possibility of replacing a shirking manager; firms have many managers, constraining the amount of equity that can be awarded to any one manager; and, a...
Persistent link: https://www.econbiz.de/10012774972
The separation of ownership and control allows controlling shareholders to pursue private benefits. We develop an analytically tractable dynamic stochastic general equilibrium model to study asset pricing and welfare implications of imperfect investor protection. Consistent with empirical...
Persistent link: https://www.econbiz.de/10012759940
A manager's current and potential future employers are continually assessing her or his ability. Such assessment is a crucial component of corporate governance and this chapter provides an overview of the research on that aspect of governance. In particular, we review how assessment generates...
Persistent link: https://www.econbiz.de/10012963757
We provide an autopsy of the patterns of corporate control and ownership concentration in a dataset covering more than 40,000 listed firms from 127 countries over 2004−2012. Employing a plethora of original and secondary sources, big data techniques, and applying the Shapley-Shubik algorithm...
Persistent link: https://www.econbiz.de/10012966589