Instituciones, costos de monitoreo y la elección de la estructura de propiedad corporativa
Recent work finds that countries with poorly developed legal systems are characterized by firms with high concentrations of owner ship and narrow capital markets. The causality of this relationship, how ever, has not been formalized. This paper presents a theoretical model to analyze the influence of institutions on the decision to go public and the choice of ownership structure. The model shows that as the efficiency of legal institutions decreases, shareholder’s monitoring costs increase, the price that they are willing to pay for shares of the company decreases, and, in consequence, the market value of publicly traded firms decreases. The low market value of public firms leads firm owners to avoid the capital market. In addition, the model suggests that maintaining high concentra tions of ownership is a value maximizing choice of the firm owner when legal institutions are inefficient.
Volume (Year): XI (2002)
Issue (Month): 1 (January-June)
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