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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.


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Journal ArticleDOI
TL;DR: In this article, the authors review two possible explanations for why shareholders tolerate board control: the monitoring hypothesis, which posits that shareholders rely on boards primarily to control the "agency costs" associated with turning day-to-day control over the firm to self-interested corporate executives; and the mediating hypothesis, who posits shareholders also seek to "tie their own hands" by ceding control to directors as a means of attracting the extracontractual, firm-specific investments of stakeholder groups such as creditors, executives, and employees.
Abstract: Why do investors in public corporations cede control over corporate assets and outputs to a board of directors, rather than retaining control for themselves? This Article reviews two possible explanations for why shareholders tolerate board control: the monitoring hypothesis, which posits that shareholders rely on boards primarily to control the "agency costs" associated with turning day-to-day control over the firm to self-interested corporate executives; and the mediating hypothesis, which posits that shareholders also seek to "tie their own hands" by ceding control to directors as a means of attracting the extracontractual, firm-specific investments of stakeholder groups such as creditors, executives, and employees. Part I of the Article reviews each hypothesis and concludes that each is theoretically plausible and internally consistent. As a result, the validity of each only can be established, or rejected, on the basis of empirical evidence. Part II of the Article reviews the available empirical evidence. Many aspects of contemporary corporate law and governance seem, on first inspection, consistent with either the monitoring or the mediating model. In the context of corporate control transactions, however, it is possible to distinguish between legal rules and governance structures consistent with a purely monitoring board, and rules and structures consistent with a mediating board. Part II concludes that, as a positive matter, corporate takeover law is consistent with the view that directors are not just monitors, but also perform a mediating function. Recognizing this, commentators who subscribe only to the monitoring model often argue that the legal rules that govern changes of control are flawed and should be reformed. Part II demonstrates, however, that this normative claim is undermined by other empirical evidence, especially new evidence on the charter provisions of firms involved in initial public offerings. Part III of the Article discusses some future directions for empirical research and identifies some pitfalls to be avoided. It concludes that, while the issue has not been resolved with certainty, at this point the empirical evidence favors the claim that directors do more than simply restrain executive opportunism; they also restrain shareholder opportunism, and so mediate between the firm's shareholders and other important constituencies that make extracontractual specific investments in the firm. What's more, shareholders favor this arrangement. Accordingly, the burden of proof should shift to those who would defend a purely monitoring model of the board.

23 citations

Journal ArticleDOI
TL;DR: In this paper, the authors investigate the effect of perceived justice on passive opportunism in an interfirm relationship, and find that perceived justice influences the effect on levels of opportunism.
Abstract: The investments made in an interfirm relationship have implications for the effectiveness of an agreement. In this study, we investigate whether these investments influence the level of passive opportunism observed in a relationship. Whereas transaction cost theory suggests that firms that make idiosyncratic investments are reluctant to engage in opportunism, reactance theory offers logic suggesting that such investments may increase the likelihood of opportunism. In addition, we investigate whether perceived justice influences the effect of investments on levels of passive opportunism. Data from 120 retail managers in the Norwegian consumer electronics industry support reactance theory predictions and indicate that interactional justice moderates the relationship between specific assets and passive opportunism. We conclude with a discussion of the implications for theory and research.

23 citations

Posted Content
TL;DR: 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.

23 citations

Journal ArticleDOI
TL;DR: In this paper, a field survey in Nanhai District, Guangdong Province, estimates how the transaction costs of rural collective construction land are influenced by the horizontal integration degree and the level of self-organization governance of collectives.

23 citations


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Performance
Metrics
No. of papers in the topic in previous years
YearPapers
202398
2022182
202168
202097
201991
201871