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A Dynamic Property Rights Theory of the Firm

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Author Info
Daniel L. Friesner
Robert Rosenman
Abstract

We present a dynamic property rights model of the firm with two types of non-pecuniary spending: one that is financed through capital markets which impacts future firm wealth, and one that does not. Consumption of the latter good is consistent with what has been found in previous models. Our theoretical model indicates that excess non-pecuniary spending may diverge or converge over time, depending on specific management goals and constraints, and regulatory factors. Using a panel of Washington State hospitals, we find evidence that non-pecuniary spending does fluctuate over time and that government policy variables, such as the level of Medicare and Medicaid reimbursement have a statistically significant impact on a firm's excess non-pecuniary spending.

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Publisher Info
Article provided by Taylor and Francis Journals in its journal International Journal of the Economics of Business.

Volume (Year): 9 (2002)
Issue (Month): 3 (November)
Pages: 311-333
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Handle: RePEc:taf:ijecbs:v:9:y:2002:i:3:p:311-333

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Related research
Keywords: Property Rights; Nonprofit; Inefficiency; Non-PECUNIARY Benefits.;

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References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
  1. Clarkson, Kenneth W, 1972. "Some Implications of Property Rights in Hospital Management," Journal of Law & Economics, University of Chicago Press, vol. 15(2), pages 363-84, October.
  2. Friedman, Bernard & Pauly, Mark, 1981. "Cost Functions for a Service Firm with Variable Quality and Stochastic Demand: The Case of Hospitals," The Review of Economics and Statistics, MIT Press, vol. 63(4), pages 620-24, November. [Downloadable!] (restricted)
  3. Boardman, Anthony E & Vining, Aidan R, 1989. "Ownership and Performance in Competitive Environments: A Comparison of the Performance of Private, Mixed, and State-Owned Enterprises," Journal of Law & Economics, University of Chicago Press, vol. 32(1), pages 1-33, April.
  4. Wedig, Gerard J & Hassan, Mahmud & Sloan, Frank A, 1989. "Hospital Investment Decisions and the Cost of Capital," Journal of Business, University of Chicago Press, vol. 62(4), pages 517-37, October. [Downloadable!] (restricted)
  5. Weisbrod, Burton A, 1983. "Nonprofit and Proprietary Sector Behavior: Wage Differentials among Lawyers," Journal of Labor Economics, University of Chicago Press, vol. 1(3), pages 246-63, July. [Downloadable!] (restricted)
  6. Mahmud Hassan, Gerard J. Wedig, Michael A. Morrisey, 2000. "Charity Care by Non-profit Hospitals: The Price of Tax-exempt Debt," International Journal of the Economics of Business, Taylor and Francis Journals, vol. 7(1), pages 47-62, February. [Downloadable!] (restricted)
  7. Bruning, Edward R & Register, Charles A, 1989. "Technical Efficiency within Hospitals: Do Profit Incentives Matter?," Applied Economics, Taylor and Francis Journals, vol. 21(9), pages 1217-33, September.
  8. Dittmar, Amy K, 2000. "Why Do Firms Repurchase Stock?," Journal of Business, University of Chicago Press, vol. 73(3), pages 331-55, July. [Downloadable!] (restricted)
  9. Wedig, Gerard J & Hassan, Mahmud & Morrisey, Michael A, 1996. " Tax-Exempt Debt and the Capital Structure of Nonprofit Organizations: An Application to Hospitals," Journal of Finance, American Finance Association, vol. 51(4), pages 1247-83, September. [Downloadable!] (restricted)
  10. Al-Obaidan, Abdullah M & Scully, Gerald W, 1992. "Efficiency Differences between Private and State-Owned Enterprises in the International Petroleum Industry," Applied Economics, Taylor and Francis Journals, vol. 24(2), pages 237-46, February.
  11. Jack Zwanziger & Glenn A. Melnick & Anil Bamezai, 2000. "Can cost shifting continue in a price competitive environment?," Health Economics, John Wiley & Sons, Ltd., vol. 9(3), pages 211-226.
  12. Frech, H E, III, 1976. "The Property Rights Theory of the Firm: Empirical Results from a Natural Experiment," Journal of Political Economy, University of Chicago Press, vol. 84(1), pages 143-52, February. [Downloadable!] (restricted)
  13. Frank, Richard G & Salkever, David S, 1994. "Nonprofit Organizations in the Health Sector," Journal of Economic Perspectives, American Economic Association, vol. 8(4), pages 129-44, Fall. [Downloadable!] (restricted)
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Cited by:
(explanations, Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.)

  1. Mulaj, Isa, 2006. "Redefining Property Rights with Specific Reference to Social Ownership in Successor States of Former Yugoslavia: Did it Matter for Economic Efficiency?," MPRA Paper 243, University Library of Munich, Germany. [Downloadable!]
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