Is Common Stock Obsolete? |
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| Authors: | EDWARD E. WILLIAMS M. CHAPMAN FINDLAY III |
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| Affiliation: | Edward;E. Williams is Henry Gardiner Symonds Professor of Administrative Science, Rice University. M. Chapman;Findlay III is Professor of Finance, University of Southern California. |
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| Abstract: | Agency theory rests on a well-defined relationship between shareholders and managers. That relationship is examined and found to be a poorly denned state-contingent contract. The implications of that finding, and the existence of only a weak market for managers, lead to the conclusion that the traditional assumptions about the rights of shareholders no longer apply and that common stock (ordinary share capital) is obsolete. |
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| Keywords: | Agents Stockholders Companies |
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