Title: A Paradox of Theory of Incomplete Contracts and Innovation of the Firm Theory
Abstract: The main firm theory is that of contracts, in which the incompleteness of the contracts makes up its logical premise and so a proposition of the theory of principal-agent , of share holder primacy of either control rights monopolized or shared, etc. However, But there is inconsistency between these theories. The inconsistency, discovered by research, originates from paradox existing in the theory of Incomplete Contracts, which comes from theory of separation of two rights (separation of ownership and control right).This contradiction leads the practice to chaos, that is, by the actual theory there being some unexplainable and unsolvable problems in management and governance of the firms. In this paper, a theory of capital-division is put forward in place of that of two-right separation, which gives a new explanation of the nature of firm and of related firm theories
Publication Year: 2003
Publication Date: 2003-01-01
Language: en
Type: article
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