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Equilibrium corporate ownership structure with free-riding
[working paper]
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Universität München, Volkswirtschaftliche Fakultät
Abstract Management control by shareholders is a public good. In the Nash equilibrium only the largest shareholder spends effort on management control. This is an incentive not to be the largest shareholder, and this incentive determines some properties of equilibrium corporate ownership structure. In p... view more
Management control by shareholders is a public good. In the Nash equilibrium only the largest shareholder spends effort on management control. This is an incentive not to be the largest shareholder, and this incentive determines some properties of equilibrium corporate ownership structure. In particular, a perfect market with
endogenous shareholdings and Nash behavior cannot overcome the underprovision problem implied by the public good problem, even if any diversification incentive for risk sharing is absent.... view less
Keywords
enterprise; equilibrium; property; structure; shareholder value; management; control; nonmarket good; risk; incentive system; economy
Classification
Management Science
Document language
English
Publication Year
1992
City
München
Series
Münchener Wirtschaftswissenschaftliche Beiträge, 92-22
Handle
https://hdl.handle.net/10419/112692
Licence
Deposit Licence - No Redistribution, No Modifications