IV. Corporate Governance
B. Shareholder Role in the Public Corporation
1. Theories of the Firm
Basic attributes
of corporation
-
entity status
-
perpetual duration
-
"person" - contract, hold
property, sue and be sued
-
specialization
-
centralized management
-
non-managing investors
-
liquidity
-
management withdrawal
rights
-
share alienability
-
limited liability
-
management (corporate
agents)
-
shareholders / up
to investment
-
entity status
-
property, contract,
litigation
-
double taxation
THeories of the firm
-
Berle-Means
-
separation of ownership
and control
-
"management control"
-
law should be control
device
-
Contractual theory
-
management-shareholder
contract
-
mediated by markets:
capital, control, employment, and chartering markets
-
law enforces implicit
bargains
-
Regulated entity - product
of law
-
mandatory vs. enabling
terms / fiduciary principles
-
anti-takeover legislation
-
law should be efficiency-minded
-
Political model
-
managers seek protection
from institutional control
-
banks, mutual funds, pension
funds systematically weakened
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Daily Thoughts
Some more of George Carlin
If a mute swears, does
his mother wash his hands with soap?
If a man is standing in
the middle of the forest speaking and there is no woman around to hear
him...is he still wrong?
If someone with multiple
personalities threatens to kill himself, is it considered a hostage situation?
Why do they lock gas station
bathrooms? Are they afraid someone will clean them?
If a turtle doesn't have
a shell, is he homeless or naked?
Why don't sheep shrink
when it rains?
Can vegetarians eat animal
crackers?
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