https://www.sfu.ca/~wainwrig/Econ400/jensen-meckling.pdf

Theory of the firm: Managerial behavior, agency costs and ownership structure

Most theorizing on the relationship between corporate social/environmental performance (CSP) and corporate financial performance (CFP) assumes that the current evidence is too fractured or too variable to draw any generalizable conclusions. With this integrative, quantitative study, we intend to show that the mainstream claim that we have little generalizable knowledge about CSP and CFP is built on shaky grounds. Providing a methodologically more rigorous review than previous efforts, we conduct a meta-analysis of 52 studies (which represent the population of prior quantitative inquiry) yielding a total sample size of 33,878 observations. The meta-analytic findings suggest that corporate virtue in the form of social responsibility and, to a lesser extent, environmental responsibility is likely to pay off, although the operationalizations of CSP and CFP also moderate the positive association. For example, CSP appears to be more highly correlated with accounting-based measures of CFP than with market-based ...

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Corporate Social and Financial Performance: A Meta-Analysis

Strategic managers are consistently faced with the decision of how to allocate scarce corporate resources in an environment that is placing more and more pressures on them. Recent scholarship in strategic management suggests that many of these pressures come directly from sources associated with social issues in management, rather than traditional arenas of strategic management. Using a greatly improved source of data on corporate social performance, this paper reports the results of a rigorous study of the empirical linkages between financial and social performance. Corporate social performance (CSP) is found to be positively associated with prior financial performance, supporting the theory that slack resource availability and CSP are positively related. CSP is also found to be positively associated with future financial performance, supporting the theory that good management and CSP are positively related.? 1997 by John Wiley & Sons, Ltd

/pdf/the-corporate-social-performance-financial-performance-link-5dvcpf0u3x.pdf

The corporate social performance-financial performance link

Companies are increasingly asked to provide innovative solutions to deep-seated problems of human misery, even as economic theory instructs managers to focus on maximizing their shareholders' wealt

Misery Loves Companies: Rethinking Social Initiatives by Business:

This paper integrates elements from the theory of agency, the theory of property rights and the theory of finance to develop a theory of the ownership structure of the firm. We define the concept of agency costs, show its relationship to the ‘separation and control’ issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears costs and why, and investigate the Pareto optimality of their existence. We also provide a new definition of the firm, and show how our analysis of the factors influencing the creation and issuance of debt and equity claims is a special case of the supply side of the completeness of markets problem. The directors of such [joint-stock] companies, however, being the managers rather of other people’s money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not for their master’s honour, and very easily give themselves a dispensation from having it. Negligence and profusion, therefore, must always prevail, more or less, in the management of the affairs of such a company. — Adam Smith (1776)

Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure

Perceptions of Firm Quality: A Cause or Result of Firm Performance

Technical analysis has been so pummeled by evidence supporting the efficient nature of market behavior that most researchers gave it up for dead years ago.' By now it seems a foregone conclusion that any sort of general trading rule based on past prices is bound to fail. That is, any general trading rule is quite unlikely to pick up sufficient dependencies to overcome the extra transactions costs of a switching strategy compared with a buyand-hold strategy. Trading rules which deal with special situations, however, may still be found to be useful. For example, Smidt suggests that there may be price dependencies associated with demand for liquidity, reaction lags, and speculative bubbles.2 Following up Smidt's hypothesis, several studies suggest profitable trading strategies associated with block trading.3 On the other hand there have been many attempts to find usable price dependencies associated with splits, dividends, and earnings reports, with mixed results.4 This paper is in the tradition of those studies which have searched for "special situation" price dependencies.

A Tax Loss Trading Rule

Bid‐asked spreads on the amex and the big board

There are at least three ways in which profits and R & D may be related. First, profits may influence subsequent R & D. Second, R & D may influence subsequent profits. And third, it is possible that R & D and profits are influenced simultaneously by some third factor. For example, government support or exogenous surges in demand could increase both at the same time. Although the first two of these relations involve influences of one variable on another over time, the problem of distinguishing between a simultaneous and a recursive relation has not been tackled in previous work. The current study employs distributed lag techniques with pooled time-series and cross-section data to discriminate among the alternative types of time relations. A sample of seven industries containing 111 firms covering the 1950-65 period was used to test these relations. The results indicate a tendency for R & D to influence future profitability and to be influenced by past profitability.

Ben S. Branch

Papers

Perceptions of Firm Quality: A Cause or Result of Firm Performance

A Tax Loss Trading Rule

Bid‐asked spreads on the amex and the big board

Research and Development Activity and Profitability: A Distributed Lag Analysis

The costs of bankruptcy