Opportunism

About: Opportunism is a research topic. Over the lifetime, 2030 publications have been published within this topic receiving 97170 citations. The topic is also known as: opportunist.

Corporate Governance Mechanisms and Firm Performance: A Survey of Literature

Abstract: IntroductionBerle and Means (1932) predicted the evolution of corporations with diffused ownership and control concentrated in the hands of the professional managers. The prediction came true but the separation of ownership and control brought certain problems along with it. The problem and the associated costs are well explained by Jensen and Meckling (1976), according to whom, the owners also called as principals, enter into a contract with the agents (i.e., managers) in order to engage them to run the organization on the behalf of the owners. As both, the agents and the principals are utility maximizers therefore, there are possibilities that the managers may not function in tune with the interests of the owners or shareholders. This problem with this contract is termed agency problem and the costs associated with this problem, agency costs. The agency problem has also been highlighted by Shleifer and Vishney (1997), according to whom, a manager borrows money from the financiers or from the shareholders to put them for productive use. The financiers, in order to ensure that their money is properly utilized, enter into a contract with the managers, because the contract cannot be a complete contract as the residual rights lie with the managers. These residual rights give them the discretion to act the way, they want to. It is therefore possible that they can act against the interests of the financiers. Therefore, it is essential to reduce the managerial opportunism to the maximum extent possible. Hart (1995), Shleifer and Vishney (1997) presented a few mechanisms, called as corporate governance mechanisms to curb or deal with agency problems and managerial opportunism. Research has suggested that corporate governance mechanism deals with the ways in which capital providers guarantee to firms of getting a return on their venture, (Shleifer and Vishney, 1997). They also propose that the corporate governance came into picture basically, for supporting and protecting the investors from the agents, that is, to reduce agency costs.Cadbury committee (1992) defines corporate governance as a system by which companies are directed and controlled. OECD (2004) defines it as a set of relations among a firm's management, its board, shareholders and stakeholders, which is one of the key elements that improves a firm's performance, and the fluctuation of capital markets, stimulating the innovative activity and development of enterprises.Dennis and McConnell (2003) also argue in their paper that, to overcome problems in corporate governance, different mechanisms can be applied. These mechanisms can be internal or external, where internal mechanisms operate through the board of directors, ownership structure (managerial ownership). Some of these mechanisms are: board of directors, ownership concentration and disclosure. However, whether these mechanisms actually serve the purpose of protecting the principles and creating value for them, needs to be researched. The value creation can be measured through the performance of the firm. In this paper, we review the literature on the relationship between the three major corporate governance mechanisms namely, board, disclosure and ownership and the firm performance.Board Characteristics and Firm PerformanceAccording to Perry and Shivdasani (2005), board of directors is one of the most important mechanisms used by the shareholders to monitor management. They state, "Charged with hiring, evaluating, compensating and ongoing monitoring of the management, the board of directors is the shareholder's primary mechanism for oversight of managers". As the board of directors is one of the most important mechanisms to check the erring management, several studies have been conducted to see how the characteristics of the board can control management and therefore enhance the performance of the firm. However, there is no consistent evidence regarding this relationship. Some studies found a positive relationship between board characteristics and firm performance, some report no relationship while, some other studies report a negative relationship between the board characteristics and firms' performance. …

In‐group preference as opportunism governance in a collectivist culture: evidence from Korean retail buyer‐supplier relationships

Abstract: Purpose – The purpose of this paper is to examine whether preference toward in‐group members can serve as opportunism governance in channel relationships in a collectivist culture. This study proposes a model of opportunism incorporating in‐group preference and trust as antecedents of opportunism. Based on Transaction Cost Economics and Social Exchange Theory, transaction‐specific investment and relationship length are employed in the model as confounding variables of in‐group preference for opportunism and trust.Design/methodology/approach – Data were collected from 109 Korean department store buyers and analyzed using Structural Equation Modeling (EQS 6.0).Findings – The results showed that buyers' in‐group preference increased buyers' trust toward suppliers and decreased suppliers' opportunistic behavior. Buyers' increased trust toward suppliers was found to reduce suppliers' opportunistic behavior. Further, Trust was significantly influenced by supplier TSI, but not by length of relationship. On the o...

Readings in the economics of contract law

Abstract: Economic analysis is being applied by scholars to an increasing range of legal problems. This collection brings together some of the main contributions to an important area of this work, the economics of contract law. The essays and illuminating notes, questions, and introductions provided by the editor outline the Law and Economics framework for analyzing contractual relationships. The first two parts of the book present a number of useful concepts - adverse selection, moral hazard, and rent seeking - and a general way of thinking about the economics of contracting and contract law. The remainder of the book considers a wide range of topics and issues. The recurring theme is that contracting parties want to assign the responsibility for adjusting to particular contingencies to the party best able to control the costs of adjustment. The adjustment problem is exacerbated by the fact that the parties might engage in various types of strategic behavior, such as opportunism, moral hazard, and rent-seeking. Many contract law doctrines can best be understood as attempts to replicate how reasonable parties might resolve this adjustment problem.

An embeddedness framing of governance and opportunism: towards a cross‐nationally accommodating theory of agency—critique and extension

Abstract: Research on corporate governance has been increased in recent years, reflecting growing concern about the future of global capitalism. Much of this research has been under socialized. Lubatkin and colleagues attempt to address this serious shortcomings of past research. While making an important and informative contribution to research, I believe these authors overlook the questionable assumptions of agency models of governance. Lubatkin and colleagues also key issues resulting from the internationalization of corporate governance. Copyright © 2006 John Wiley & Sons, Ltd.