The Law and Finance account of the ubiquity of controlling shareholders in developing markets is based on conditions in the capital market: poor shareholder protection law prevents controlling shareholders from parting with control out of fear of exploitation by a new controlling shareholder who...

Our goal in this paper is to explain the location of transactions (and contracts) in a larger system of production. We first characterize the system as a network of tasks and transfers. While transfers between agents are necessary and ubiquitous, the mundane transaction costos of standardizing,...

This chapter reviews the recent economic literature on transfer pricing. As a starting point, we take Hirshleifer's transfer pricing model and discuss the basic structure of the most widely used model extensions. We review transfer pricing models with asymmetric information, transfer pricing...

Managing the different companies in which they invest and at the same time performing portfolio optimization for themselves, venture capitalists position themselves as a pure-play or diversified conglomerate through their cumulative portfolios. I examine the effects of two investment strategies...

Our goal in this paper is to explain the location of transactions (and contracts) in a system of production. Systems of production are engineered systems, and where to place quot;transactionsquot; is one of the basic engineering problems that the designers of such systems face. We begin by...

When the design of an artifact is quot;modularized,quot; the elements of the design are split up and assigned to modules according to a formal architecture or plan. Some of the modules are quot;hidden,quot; meaning that design decisions in those modules do not affect decisions in other modules;...

The integration of two vertically linked business units allows the single owner to choose the compensation contracts of the managers of the two units coordinatively and thus internalizes a contracting externality when there is technology or production synergy. On the other hand, vertical...

We model how a firm motivates a risk-averse CEO not only to exert productive effort but also to evaluate and to adopt new projects. Evaluation effort produces better information on risky projects, but the agent may reject a good project in order to avoid risk. Productive effort increases the...

In quot;Managing in the Age of Modularity,quot; which was written in June 1997 and appeared in the Harvard Business Review, we proposed that a new technological phenomenon, the modular design of complex computer systems, caused the emergence of a large modular cluster of firms and markets in the...

We examine a sample of firms that adopt quot;target ownership plans,quot; under which managers are required to own a minimum amount of stock. We find that prior to plan adoption, such firms exhibit low managerial equity ownership and low stock price performance. Managerial equity ownership...