Corporate governance and transaction cost economics: A study of the equity governance structure

This paper examines the Transaction Cost Economics (TCE) theory of capital structure and finds that for the case of equity the usual TCE logic is not fully worked out. In particular, an analysis of the key issue of bilateral dependency between the firm and its shareholders is absent. To fill this ga...

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Autores:
Saravia, Jimmy A.
Saravia, Silvia
Tipo de recurso:
Fecha de publicación:
2014
Institución:
Universidad EAFIT
Repositorio:
Repositorio EAFIT
Idioma:
eng
OAI Identifier:
oai:repository.eafit.edu.co:10784/2429
Acceso en línea:
http://hdl.handle.net/10784/2429
Palabra clave:
Corporate Governance
Transaction Cost Economics
Free Cash flows
Firm Valuation
Rights
License
Acceso abierto
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spelling Medellín de: Lat: 06 15 00 N degrees minutes Lat: 6.2500 decimal degrees Long: 075 36 00 W degrees minutes Long: -75.6000 decimal degrees2014-05-29T19:18:15Z2014-05-122014-05-29T19:18:15Zhttp://hdl.handle.net/10784/2429D23G31G32G34This paper examines the Transaction Cost Economics (TCE) theory of capital structure and finds that for the case of equity the usual TCE logic is not fully worked out. In particular, an analysis of the key issue of bilateral dependency between the firm and its shareholders is absent. To fill this gap in the literature, the paper further develops the theory of the equity governance structure by taking account of the concept of bilateral dependency over the lifecycle of the firm. The paper finds that, both theoretically and empirically, contractual hazards are indeed mitigated for the case of fast growing young firms which are dependent on shareholders to finance future growth. In contrast, for the case of mature firms, which in virtue of their large free cash flows are independent from shareholders, contractual safeguards are altered to the disadvantage of shareholders and consequently managerial discretion costs increase.engUniversidad EAFITEscuela de Economía y FinanzasCorporate governance and transaction cost economics: A study of the equity governance structureworkingPaperinfo:eu-repo/semantics/workingPaperDocumento de trabajo de investigacióndrafthttp://purl.org/coar/version/c_b1a7d7d4d402bccehttp://purl.org/coar/resource_type/c_8042Acceso abiertohttp://purl.org/coar/access_right/c_abf2Corporate GovernanceTransaction Cost EconomicsFree Cash flowsFirm Valuationjsaravia@eafit.edu.coSilvia.SARAVIA@cepal.orgSaravia, Jimmy A.acc6d813-786e-46f8-86f2-f198370c7e4c-1Saravia, Silvia57797aca-49ea-409c-915e-4484b9c7ea1b-1LICENSElicense.txtlicense.txttext/plain; charset=utf-81145https://repository.eafit.edu.co/bitstreams/c4fee460-4ee3-4cea-b08a-bfa157f3b6c0/downloada4a15015cc3b57a4390e89906678ba6eMD52ORIGINAL2014_11_Jimmy_Saravia.pdf2014_11_Jimmy_Saravia.pdfDocumento de trabajo de investigaciónapplication/pdf1287483https://repository.eafit.edu.co/bitstreams/9924c944-ce0d-4d3d-8143-83d6b7c3f6b1/download839857a4a593f5c5462e4278f9b0ff8cMD5310784/2429oai:repository.eafit.edu.co:10784/24292024-12-04 11:50:20.656open.accesshttps://repository.eafit.edu.coRepositorio Institucional Universidad EAFITrepositorio@eafit.edu.co
dc.title.eng.fl_str_mv Corporate governance and transaction cost economics: A study of the equity governance structure
title Corporate governance and transaction cost economics: A study of the equity governance structure
spellingShingle Corporate governance and transaction cost economics: A study of the equity governance structure
Corporate Governance
Transaction Cost Economics
Free Cash flows
Firm Valuation
title_short Corporate governance and transaction cost economics: A study of the equity governance structure
title_full Corporate governance and transaction cost economics: A study of the equity governance structure
title_fullStr Corporate governance and transaction cost economics: A study of the equity governance structure
title_full_unstemmed Corporate governance and transaction cost economics: A study of the equity governance structure
title_sort Corporate governance and transaction cost economics: A study of the equity governance structure
dc.creator.fl_str_mv Saravia, Jimmy A.
Saravia, Silvia
dc.contributor.eafitauthor.none.fl_str_mv jsaravia@eafit.edu.co
Silvia.SARAVIA@cepal.org
dc.contributor.author.none.fl_str_mv Saravia, Jimmy A.
Saravia, Silvia
dc.subject.keyword.eng.fl_str_mv Corporate Governance
Transaction Cost Economics
Free Cash flows
Firm Valuation
topic Corporate Governance
Transaction Cost Economics
Free Cash flows
Firm Valuation
description This paper examines the Transaction Cost Economics (TCE) theory of capital structure and finds that for the case of equity the usual TCE logic is not fully worked out. In particular, an analysis of the key issue of bilateral dependency between the firm and its shareholders is absent. To fill this gap in the literature, the paper further develops the theory of the equity governance structure by taking account of the concept of bilateral dependency over the lifecycle of the firm. The paper finds that, both theoretically and empirically, contractual hazards are indeed mitigated for the case of fast growing young firms which are dependent on shareholders to finance future growth. In contrast, for the case of mature firms, which in virtue of their large free cash flows are independent from shareholders, contractual safeguards are altered to the disadvantage of shareholders and consequently managerial discretion costs increase.
publishDate 2014
dc.date.available.none.fl_str_mv 2014-05-29T19:18:15Z
dc.date.issued.none.fl_str_mv 2014-05-12
dc.date.accessioned.none.fl_str_mv 2014-05-29T19:18:15Z
dc.type.eng.fl_str_mv workingPaper
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dc.type.local.spa.fl_str_mv Documento de trabajo de investigación
dc.type.hasVersion.eng.fl_str_mv draft
dc.identifier.uri.none.fl_str_mv http://hdl.handle.net/10784/2429
dc.identifier.jel.none.fl_str_mv D23
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url http://hdl.handle.net/10784/2429
identifier_str_mv D23
G31
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dc.language.iso.eng.fl_str_mv eng
language eng
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dc.coverage.spatial.eng.fl_str_mv Medellín de: Lat: 06 15 00 N degrees minutes Lat: 6.2500 decimal degrees Long: 075 36 00 W degrees minutes Long: -75.6000 decimal degrees
dc.publisher.spa.fl_str_mv Universidad EAFIT
dc.publisher.department.spa.fl_str_mv Escuela de Economía y Finanzas
institution Universidad EAFIT
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