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.

Understanding Alliance Evolution and Termination: Adjustment Costs and the Economics of Resource Value

Abstract: Alliances have been studied extensively in the past and various arguments suggested to explain their evolution and eventual termination. We argue that one important explanation of alliance termination has remained overlooked, one where the mechanism revolves around resource value and is independent of any mismanagement, opportunism, lack of trust, interpretive misunderstanding, or perceptions of inequity. In this explanation, we recognize explicitly that resources undergo transformation through an alliance, and this transformation reveals new previously imperfectly predicted costs to remaining in the alliance as well as new opportunities outside the alliance. We apply the concepts of direct and indirect adjustment costs and inter-temporal economies of scope to explain these phenomena and demonstrate that, depending on the particular structure of incentive asymmetry between the two firms after alliance formation, the new circumstances may motivate a revised cost/profit sharing arrangement, a change in ownership of alliance resources, or a complete dissolution of the alliance. Some determinants of adjustment costs are explored in detail, covering resource characteristics, resource combination characteristics, and environment characteristics. Based on the economics of resource value, our argument has implications not just for alliance evolution and termination but also provides a distinct lens to explain the evolution of firm boundaries and the manner of transition of alliances into acquisitions.

Blockchain Technology as Economic Infrastructure: Revisiting the Electronic Markets Hypothesis

Abstract: In the late 1980s and early 1990s the electronic markets hypothesis offered a prediction about effect of information technology on industrial organisation, and many business writers forecast significant changes to the shape and nature of the firm. However, these changes did not come to pass. This paper provides an economic analysis of why, using the transaction cost economic framework of Ronald Coase and Oliver Williamson. Non-hierarchical corporate organisation struggled against contracting problems in the presence of possible opportunistic behaviour. Technologies of trust offer an institutional mechanism that acts on the margin of trust, suppressing opportunism. The paper concludes that blockchain technology provides an economic infrastructure for the coordination of economic activity and the possible realisation of the electronic markets hypothesis.

Determinants and Accounting Consequences of Forming a Governance Committee: Evidence from the United States

Abstract: Manuscript Type: Empirical Research Question/Issue: This study examines the determinants of forming a governance committee and whether such a committee constrains managerial opportunism. Research Findings/Insights: This study examines a sample of S&P 1,500 firms over the period of 1996 to 2002. It finds that firms with a larger, more independent, and more active board, higher agency costs (as indicated by lower managerial ownership and lower takeover vulnerability), and past occurrence of class-action lawsuits are more likely to voluntarily form a governance committee. This study also provides evidence that having a governance committee brings real consequences in that it constrains managerial opportunism by reducing aggressive financial reporting. Theoretical/Academic Implications: Consistent with substitution theory, this study documents that a firm is more likely to form a governance committee to compensate for its severe agency problems. It also demonstrates that delegating some corporate governance duties to a specific board committee could improve the effectiveness of board monitoring. Practitioner/Policy Implications: This study provides insights to regulators who are interested in regulating board structure. It suggests that whether a firm needs to form a governance committee is endogenously determined by the firm's characteristics when the firm has an independent board. In addition, this study documents that a voluntarily formed governance committee is able to mitigate agency costs in the form of constraining managerial accounting discretion.

Transparency Reforms in the Public Sector: Beyond the New Economics of Organization

Abstract: This article challenges the arguments of the new economics of organization (NEO) on the phenomenon of transparency in the public sector. This is achieved by conducting an empirical study of 16 federal agencies in Mexico, which analyzes the implementation of the federal transparency law. Our findings indicate that some organizations are developing internal dynamics well beyond those anticipated by the law, while others are just complying with the minimum legal requirements. We suggest that there is a dynamic of transparency ‘internalization’ in these organizations that the NEO has been neglecting, and also a basic contradiction in the construction of the NEO theory, which affects the design and implementation of transparency laws. Solving this problem would demand a change of the underlying paradigm that sustains transparency reforms. Instead of taking opportunism, selfishness, and a profound distrust attitude toward public servants as departure points, effective transparency reforms require trustworthy pu...