Corporate Governance and the Financing of Investment for Structural Change
AbstractThe paper puts forward the proposition that large corporations should be treated as financial institutions in their own right, as they use available earning from some activities to finance others, including new developments. With this view, it is suggested that the role of the financial system may be seen as channelling funds from activities earning cash to activities needing cash (rather than channelling fund from households to firms). Starting from a critical assessment of the literature on agency costs of internal finance, the paper discusses the pros and cons of having new activities financed within given corporate shells, with significant management autonomy; this is compared to a system where earnings are distributed and - at least partly - reinvested through organized markets. The political economy of decision making within existing corporate shells is identified as a major source of bias in decisions.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim in its series Sonderforschungsbereich 504 Publications with number 00-32.
Length: 25 pages
Date of creation: 10 Jul 2000
Date of revision:
Note: I am grateful for helpful comments from Colin Mayer and Georg Rich as well as research support from the Deutsche Forschungsgemeinschaft through Sonderforschungsbereich 504.
Contact details of provider:
Postal: D-68131 Mannheim
Phone: (49) (0) 621-292-2547
Fax: (49) (0) 621-292-5594
Web page: http://www.sfb504.uni-mannheim.de/
More information through EDIRC
Web page: http://www.sfb504.uni-mannheim.de
This paper has been announced in the following NEP Reports:
- NEP-ACC-2001-07-13 (Accounting & Auditing)
- NEP-ALL-2001-07-13 (All new papers)
- NEP-CFN-2001-07-13 (Corporate Finance)
- NEP-FIN-2001-07-13 (Finance)
- NEP-PKE-2001-07-13 (Post Keynesian Economics)
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.:
- Elston, Julie Ann, 1996.
"Investment, Liquidity Constraints and Bank Relationships: Evidence from German Manufacturing Firms,"
CEPR Discussion Papers
1329, C.E.P.R. Discussion Papers.
- Elston, J-A, 1997. "Investment, Liquidity Constaints and Bank Relationships : Evidence from German Manufacturing Firms," Papers 17, American Institute for Contemporary German Studies-.
- Steven Fazzari & R. Glenn Hubbard & Bruce C. Petersen, 1988.
"Financing Constraints and Corporate Investment,"
NBER Working Papers
2387, National Bureau of Economic Research, Inc.
- Corbett, Jenny & Jenkinson, Tim, 1997. "How Is Investment Financed? A Study of Germany, Japan, the United Kingdom and the United States," The Manchester School of Economic & Social Studies, University of Manchester, vol. 65(0), pages 69-93, Supplemen.
- Marco Becht & Fabrizio Barca, 2001. "The control of corporate Europe," ULB Institutional Repository 2013/13302, ULB -- Universite Libre de Bruxelles.
- Mark J. Roe, 1997. "The Political Roots Of American Corporate Finance," Journal of Applied Corporate Finance, Morgan Stanley, vol. 9(4), pages 8-22.
- Corbett, Jenny & Jenkinson, Tim, 1996. "The Financing of Industry, 1970-1989: An International Comparison," Journal of the Japanese and International Economies, Elsevier, vol. 10(1), pages 71-96, March.
- Franz R. Hahn, 2002. "The Politics of Financial Development. The Case of Austria," WIFO Working Papers 187, WIFO.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Carsten Schmidt).
If references are entirely missing, you can add them using this form.