Open AccessPosted Content
Shirking and Sharking: A Legal Theory of the Firm
TLDR
In this paper, economic theories of the firm are examined from a legal perspective. But the authors focus on the importance of agency authority and do not consider the costs of shirking and misuse of power and authority.Abstract:
This article reexamines economic theories of the firm from a legal perspective. Focusing on the importance of agency authority, it recommends a revision in economic theories of the firm which emphasize agency and transactions costs, contracts, property rights, and employment. A theory of the firm is advanced which encompasses various economic principles under a legal umbrella. From a legal perspective, this theory of the firm suggests a solution to a problem that economic theories have in defining the boundaries of firms. The structure of firms is described as involving both consumer markets for goods and services and organizational metamarkets. The costs of agents and principals, among other important factors, determine which firms survive over time. The article also recommends that a theory of the firm should include the costs of opportunism or sharking by principals or quasi-principals through the misuse of power and authority within firms, as well as the more commonly recognized agency costs of shirking. It concludes with examples of the implications of this analysis of the firm for the regulation of opportunism in the law of enterprise organization. In particular, it suggests that recognizing the costs of sharking as well as shirking supports judicial review of compliance with fiduciary duties in four different areas: oppression of minority shareholders, executive compensation, noncontractual harm to creditors, and financial reengineering of capital structure.read more
Citations
More filters
Pay without Performance, The Unfulfilled Promise of Executive Compensation, Part III: The Decoupling of Pay from Performance
TL;DR: Pay without performance: The Unfulfilled Promise of Executive Compensation (Harvard University Press, September 2004) as mentioned in this paper provides a detailed account of how structural flaws in corporate governance have enabled managers to influence their own pay and produced widespread distortions in pay arrangements.
Journal ArticleDOI
From Fictions and Aggregates to Real Entities in the Theory of the Firm
TL;DR: Gindis et al. as discussed by the authors, from fictions and aggregates to real entities in the theory of the firm, 5: 1, 25-46, doi:10.1017/S1744137408001203.
Journal ArticleDOI
The importance of personal characteristics in franchisee selection
TL;DR: In this article, the authors focused on six evaluation criteria used by franchisors to evaluate prospective franchisees and found that becoming a franchisee involves more than being financially or professionally qualified, and that the highest level of importance was assigned to a prospective franchisee's personal characteristics.
Journal ArticleDOI
Putting a Stake in Stakeholder Theory
Eric W. Orts,Alan Strudler +1 more
TL;DR: In this paper, the authors investigate a variety of conceptual quandaries that stakeholder theory faces in addressing these two general problems and argue that these quandary pose intractable obstacles for stakeholder theories which prevent it from delivering on its large promises.
Journal ArticleDOI
Employee voice in corporate governance: a defense of strong participation rights
TL;DR: In this paper, the authors argue that the conflict between these two competing rights claims is best resolved by limiting the scope of corporate property rights and by recognizing a strong employee right to co-determine corporate decisions.
References
More filters
Journal ArticleDOI
Corporate Governance in the Bankruptcy Reorganization of Large, Publicly Held Companies
Explaining the Pattern of Secured Credit
TL;DR: In this paper, a model of the borrower's decision to grant collateral was developed based on the borrowers' perceptions of the costs and benefits of secured and unsecured transactions, and the model was used to explain three separate aspects of the pattern of secured credit: the relatively infrequent use of security interest by companies with strong financial records, the relation between the use of collateral and the duration of the debt, and apparently low rate of retention of security interests by suppliers.
Journal ArticleDOI
Bondholder Coercion: The Problem of Constrained Choice in Debt Tender Offers and Recapitalizations
John C. Coffee,William A. Klein +1 more
TL;DR: The rate of defaults on junk bonds is increasing rapidly as mentioned in this paper, and the latest data show that corporations defaulted or missed scheduled payments on $8.2 billion of debt, a record level, during the first quarter of 1991, according to Moody's Investors Services, Inc.