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[Documento] Controlling Shareholders and Contract Theory: A Review of Literature

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  • Roberto Fortich Mesa

Abstract

In this survey I succinctly review the contract theory literature on the rebellious manager type of agency conflict. Freedom of enterprise, private property, and the incentives of businessmen to make profits are essential values of the capitalist economic system. When economic institutions that preserve these values are in place, capital circulates, businesses invest and the economy grows. Just as prices do not need to be intervened for markets to work, capital too can work when left alone: savings are transformed into investments, prospects of future cash flows are taken at present value, and small-investor distrust is overcome even in the face of unfamiliar risky enterprises.

Suggested Citation

  • Roberto Fortich Mesa, 2018. "[Documento] Controlling Shareholders and Contract Theory: A Review of Literature," Revista Economía y Región, Universidad Tecnológica de Bolívar, vol. 12(1), pages 157-162, June.
    • Handle: RePEc:col:000411:018502
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