Economics of Damage Remedies IV: Incomplete Contracts, Bilateral Reliance, Two-Sided Asymmetric Information

Bag, Sugata

doi:10.1007/978-3-319-65268-9_6

Cited by 1 publication

(1 citation statement)

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“…While the equity holders and the board of directors expect the management to make decisions that maximize shareholders' wealth [11], the firm's shareholders may have different insights into the firm's affairs. Due to the managers' superior access to information, the shareholders and board of directors may require assistance in effectively monitoring the management's actions [12]. This information asymmetry creates an incentive for the management to act in a way that maximizes their own utilities at the expense of the capital owners' interests.…”

Section: Causes Of Separation Of Ownership and Controlmentioning

confidence: 99%

Assessment of Salient Problems Associated with the Separation of Ownership and Control of Modern Cor-porations: Evaluation of Solutions and Their Effectiveness

Zeyu,

Ziyuan

2023

AEMPS

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This paper examines the salient problems related to the separation of ownership and control of modern corporations, as discussed in the books The Wealth of Nations and The Modern Corporation and Private Property. It qualitatively analyzes past empirical studies and evaluates the effectiveness of various solutions aimed at alleviating the separation between ownership and control. The analysis reveals that the agency relationship between shareholders and organizational managers underpins the phenomenon of ownership and control separation in modern companies. This separation offers several benefits, including ensuring business sustainability through professional management, efficient decision-making, and maximizing physical capital. Additionally, numerous mechanisms have proven effective in managing these issues. The paper explores management ownership and incentives, independent ownership, and institutional ownership as solutions that they have been found to reduce institutional problems and manage risk avoidance.

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Section: Causes Of Separation Of Ownership and Controlmentioning

confidence: 99%