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Unternehmensfinanzierung, Unternehmenskontrolle und Ressourcenallokation: Was leistet das Finanzsystem?

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  • Hellwig, Martin

    ()
    (Sonderforschungsbereich 504)

Abstract

The paper reviews the literature on the role of the financial system for corporate finance and control and takes stock of our understanding of the issues. Topics covered include the information efficiency of organized markets, the significance of information efficiency for corporate control, the role of financial intermediaries, the preponderance of internal finance, and the political economy of corporate control and finance. The paper questions the standard assumption that firms are willing to trade control for finance, or that such contracts if they are made are actually maintained. The paper suggests that the pre- ponderance of internal finance and the political system's willingness to support management control over assets and retentions are the major empirical phenomenon to be explained and analysed. It argues that these phenomena turn the financial systems of developed economies from systems channeling funds from households to firms into systems channeling funds from firms with excess cash flow to firms with excess investment opportunities. Existing theories, including Jensen's free-cash-flow hypothesis, do not provide a fully satisfactory account of the allocative implications of this structure.

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Bibliographic Info

Paper provided by Sonderforschungsbereich 504, Universität Mannheim & Sonderforschungsbereich 504, University of Mannheim in its series Sonderforschungsbereich 504 Publications with number 97-02.

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Length: 0 pages
Date of creation: 01 Jan 1997
Date of revision:
Handle: RePEc:xrs:sfbmaa:97-02

Note: Financial support from the Deutsche Forschungsgemeinschaft is gratefully acknowledged.
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Cited by:
  1. Zingales, Luigi, 1998. "Corporate Governance," CEPR Discussion Papers 1806, C.E.P.R. Discussion Papers.
  2. Stefan Beiner & Wolfgang Drobetz & Markus M. Schmid & Heinz Zimmermann, 2004. "Corporate Governance und Unternehmungsbewertung in der Schweiz," Working papers 2004/03, Faculty of Business and Economics - University of Basel.
  3. Axel Börsch-Supan & Jens Köke, 2002. "An Applied Econometricians' View of Empirical Corporate Governance Studies," German Economic Review, Verein für Socialpolitik, vol. 3(3), pages 295-326, 08.

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