Business Essays

9087 Words Nov 6th, 2012 37 Pages
Agency Problems and the Theory of the Firm Author(s): Eugene F. Fama Reviewed work(s): Source: Journal of Political Economy, Vol. 88, No. 2 (Apr., 1980), pp. 288-307 Published by: The University of Chicago Press Stable URL: http://www.jstor.org/stable/1837292 . Accessed: 17/10/2012 15:40
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Roger Kormendi has contributed much, and the comments of A. Alchian, S. Bhattacharya, G. Becker, F. Black, M. Blume, M. Bradley, D. Breeden, N. Gonedes, B. Horwitz, G. Jarrell, E. H. Kim, J. Long, H. Manne, W. Meckling, M. H. Miller, M. Scholes, C. Smith, G. J. Stigler, R. Watts, T. Whisler, and J. Zimmerman are gratefully acknowledged. Presentations at the finance, labor economics, and industrial organization workshops of the University of Chicago and the workshop of the Managerial Economics Research Center of the University of Rochester have been helpful. The paper is largely an outgrowth of discuionscr with Michael C( lnsun

'Jensen and Meckling (1976) quote from Adam Smith (1776). The modern literature on the problem dates back at least to Berle and Means (1932).
[Journal {f Political Economy, 1980, vol. 88, no. 21 ? 1980 by The University of Chicago. 0022-380880/28802-0005$01.65

288

THEORY

OF THE FIRM

289

manager, who single-mindedly operates the firm to maximize profits, in favor of theories that focus more on the motivations of a manager who controls but does not own and who has little resemblance to the

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