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A Model of Corporate Governance As a System

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  • Heinrich, Ralph P.

Abstract

This paper provides a rationale for the coexistence of different systems of corporate governance based on the multitude of agency problems typically to be governed within a given firm. Because there are complementarity and substitution relationships between governance instruments, specific combinations of instruments which reinforce each other in minimizing agency costs fit together better than alternative combinations. We derive comparative static results showing how various governance instruments can be combined to form a coherent system of corporate governance and how changes in exogenous parameters can lead to simultaneous, systemic changes in the instruments used.

Suggested Citation

  • Heinrich, Ralph P., 1999. "A Model of Corporate Governance As a System," Kiel Working Papers 931, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:931
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    File URL: https://www.econstor.eu/bitstream/10419/17791/1/271663987.pdf
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    References listed on IDEAS

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    Cited by:

    1. Heinrich, Ralph P., 1999. "Complementarities in Corporate Governance - A Survey of the Literature with Special Emphasis on Japan," Kiel Working Papers 947, Kiel Institute for the World Economy (IfW Kiel).
    2. Heinrich, Ralph P., 2000. "Complementarities in Corporate Governance: Ownership Concentration, Capital Structure, Monitoring and Pecuniary Incentives," Kiel Working Papers 968, Kiel Institute for the World Economy (IfW Kiel).

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    More about this item

    Keywords

    Corporate governance; Complementarity; Agency problem;
    All these keywords.

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General

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