Entrepreneurship and Corporate governance
AbstractThis paper explores the relationship between the theory of the firm and the theory of financial markets. I begin with Mises’s claim that the defining feature of an industrialized, market economy is the use of financial markets to allocate capital among firms and among industries. This presupposes a market for the ownership and control of productive assets. Unfor-tunately, the Austrian theory of capital markets is relatively undeveloped. Focusing on the financial-market entrepreneur, I outline some features of an Austrian theory of corporate gover-nance and relate them to the internal organization of the firm. I begin by reviewing the tradi-tional, production-function theory of the firm and suggesting two alternative perspectives: that of the entrepreneur and that of the capitalist. I next discuss the Coasian or "contractual" approach to the firm and argue that it provides a useful organizing framework for Austrian research on the firm. The subsequent section proposes entrepreneurship and economic calculation as building blocks for an Austrian theory of the firm. Finally, after a brief review of capital-market behavior and the disciplinary role of takeovers, I outline four areas for Austrian research in corporate governance: firms as investments, internal capital markets, comparative corporate governance, and financiers as entrepreneurs.
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Bibliographic InfoPaper provided by Department of Industrial Economics and Strategy, Copenhagen Business School in its series IVS/CBS Working Papers with number 98-15.
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Web page: http://www.cbs.dk/forskning_viden/fakulteter_institutter_centre/institutter/oekonomi/ivs/
austrian economics; capital markets; corporate governance;
Find related papers by JEL classification:
- L22 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Organization and Market Structure
- G30 - Financial Economics - - Corporate Finance and Governance - - - General
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