"This paper integrates elements from the theory of agency, the theory of property rights and the theory of finance to develop a theory of the ownership structure of the firm. We define the concept of agency costs, show its relationship to the 'separation and control' issue, investigate the nature of the agency costs generated by the existence of debt and outside equity, demonstrate who bears the costs and why, and investigate the Pareto optimality of their existence. We also provide a new definition of the firm, and show how our analysis of the factors influencing the creation and issuance of debt and equity claims is a special case of the supply side of the completeness of markets problem."
Quote Details
Added by wikiquote-import-bot
Unverified quote
0 likes
Academics from the United StatesEconomists from the United StatesBusiness theorists from the United States
Original Language: English
Available Languages (1)
Sources
Michael C. Jensen and William H. Meckling. "Theory of the firm: Managerial behavior, agency costs and ownership structure." Journal of financial economics 3.4 (1976): 305-360. Abstract
https://en.wikiquote.org/wiki/William_H._Meckling
Revision History
No revisions have been submitted for this quote.
Categories
William H. Meckling
William H. Meckling (1921 - May 15, 1998) was an American economist and professor of Management and Government Policy and Dean at the , University of Rochester, working in the areas of "managerial economics and the economic analysis of law, and his work received international recognition" (Source: Currents, 1998).
8 quotes on TrueQuotesView all quotes by William H. Meckling →
Related Quotes
"It is traditional in the theory of the firm to define the production opportunity set available to the firm in terms o…"
"The corporation as an organizational form is an enormously productive social invention. Partly because of its success…"
"This paper analyzes the relations between knowledge, control and organizational structure both in the market system a…"
"Economics is a discipline that can help students solve the sort of problems they meet within the firm."
"The examples [of economics] all had to relate to management. In price theory, we talked about two divisions within a …"
"[William H. Meckling was] the consummate scholar who was constantly probing and questioning, and always stimulating e…"
"[William H. Meckling was] a most unusual man – one who has never managed a business, who has no advanced degree, and …"
"For him delicious flavors dwell In books as in old Muscatel."
"And in the evening, everywhere Along the roadside, up and down, I see the golden torches flare Like lighted street-la…"
"Song like a rose should be; Each rhyme a petal sweet; For fragrance, melody, That when her lips repeat The words, her…"