The New Palgrave Dictionary of Economics

2018 Edition
| Editors: Macmillan Publishers Ltd


  • Randall Morck
Reference work entry


A corporation is an artificial person with many of the rights of a biological one. The first business corporations pooled the savings of many individuals to permit ventures on a scale none could afford individually. Most large American and British corporations lack controlling shareholders; the consequent lack of monitoring and control gives rise to corporate governance problems reflecting the private benefits of control. The view that corporations should be run to maximize shareholder conflicts in many countries with the actual legal duties of corporate officers, and collides with evidence that stock prices are sometimes set by investors with incomplete information.


Agency costs Corporate governance Corporations Limited liability Monitoring Noise traders Private benefits of control Stock markets Time inconsistency 

JEL Classifications

This is a preview of subscription content, log in to check access.


  1. Alchian, A., and H. Demsetz. 1972. Production, information costs and economic organization. American Economic Review 62: 777–795.Google Scholar
  2. Aoki, M., and R.P. Dore. 1994. The Japanese firm: The sources of competitive strength. New York: Oxford University Press.CrossRefGoogle Scholar
  3. Baumol, W. 1959. Business behavior, value and growth. New York: Macmillan.Google Scholar
  4. Baumol, W. 1962. On the theory of expansion of the firm. American Economic Review 52: 1078–1087.Google Scholar
  5. Bebchuk, L., R. Kraakman, and G. Triantis. 2000. Stock pyramids, cross ownership and dual class equity: The mechanisms and agency costs of separating control from cash flow rights. In Concentrated corporate ownership, ed. R. Morck. Chicago: University of Chicago Press.Google Scholar
  6. Berle, A., and G. Means. 1932. The modern corporation and private property. New York: Macmillan.Google Scholar
  7. Black, B.S., and J.C. Coffee Jr. 1997. Hail Britannia? Institutional investor behavior under limited regulation. Michigan Law Review 92: 1997–2087.CrossRefGoogle Scholar
  8. Bonbright, J., and G. Means. 1932. The holding company – Its public significance and its regulation. New York: McGraw-Hill.Google Scholar
  9. Burkart, M., F. Panunzi, and A. Shleifer. 2003. Family firms. Journal of Finance 58: 2173–2207.CrossRefGoogle Scholar
  10. Coase, R. 1937. The nature of the firm. Economica 4: 386–405.CrossRefGoogle Scholar
  11. Dunlavy, C. 2004. The unnatural origins of one vote per share – A chapter in the history of corporate governance. Working paper, Department of History, University of Wisconsin, Madison.Google Scholar
  12. Dyck, A., and L. Zingales. 2004. Private benefits of control: An international comparison. Journal of Finance 59: 537–601.CrossRefGoogle Scholar
  13. Faleye, O., V. Mehrotra, and R. Morck. 2006. When labor has a voice in corporate governance. Journal of Financial and Quantitative Analysis 41: 489–510.CrossRefGoogle Scholar
  14. Fama, E., and M. Jensen. 1983a. Agency problems and residual claims. Journal of Law and Economics 26: 327–349.CrossRefGoogle Scholar
  15. Fama, E., and M. Jensen. 1983b. Separation of ownership and control. Journal of Law and Economics 26: 301–325.CrossRefGoogle Scholar
  16. Fohlin, C. 2005. The history of corporate ownership and control in Germany. In The history of corporate governance around the world: Family business groups to professional managers, ed. R. Morck. Chicago: University of Chicago Press.Google Scholar
  17. Franks, J., C. Mayer, and S. Rossi. 2005. Spending less time with the family: The decline of family ownership in the UK. In The history of corporate governance around the world: Family business groups to professional managers, ed. R. Morck. Chicago: University of Chicago Press.Google Scholar
  18. Frentrop, P. 2002/3. A history of corporate governance. Amsterdam: Deminor Press.Google Scholar
  19. Grossman, S., and O. Hart. 1988. One share one vote and the market for corporate control. Journal of Financial Economics 20: 175–202.CrossRefGoogle Scholar
  20. Jensen, M. 2004. Agency costs of overvalued equity. Harvard NOM research paper no. 04-26. Harvard Business School.Google Scholar
  21. Jensen, M., and W. Meckling. 1976. Theory of the firm: Managerial behavior, agency costs and ownership structure. Journal of Financial Economics 3: 305–360.CrossRefGoogle Scholar
  22. Johnson, S., R. La Porta, F. Lopez-de-Silanes, and A. Shleifer. 2000. Tunneling. American Economic Review 90: 22–27.CrossRefGoogle Scholar
  23. La Porta, R., F. Lopez-de-Silanes, and A. Shleifer. 1999. Corporate ownership around the world. Journal of Finance 54: 471–517.CrossRefGoogle Scholar
  24. Malliaris, A.G., and W. Brock. 1983. Stochastic methods in economics and finance. Amsterdam: North-Holland.Google Scholar
  25. Morck, R. 2005. How to eliminate pyramidal business groups: The double-taxation of intercorporate dividends and other incisive uses of tax policy. Tax Policy and the Economy 19: 135–179.CrossRefGoogle Scholar
  26. Morck, R., and M. Nakamura. 1999. Banks and corporate control in Japan. Journal of Finance 54: 319–340.CrossRefGoogle Scholar
  27. Morck, R., A. Shleifer, and R. Vishny. 1988. Management ownership and market valuation: An empirical analysis. Journal of Financial Economics 20: 293–315.CrossRefGoogle Scholar
  28. Morck, R., D.A. Stangeland, and B. Yeung. 2000. Inherited wealth, corporate control, and economic growth: The Canadian disease. In Concentrated corporate ownership, ed. R. Morck. Chicago: University of Chicago Press.CrossRefGoogle Scholar
  29. Morck, R., D. Wolfenzon, and B. Yeung. 2005. Corporate governance, economic entrenchment, and growth. Journal of Economic Literature 43: 655–720.CrossRefGoogle Scholar
  30. Myers, S., and N. Majluf. 1984. Corporate financing and investment decisions when firms have information that investors do not have. Journal of Financial Economics 13: 187–222.CrossRefGoogle Scholar
  31. Nenova, Tatiana. 2003. The value of corporate voting rights and control: A cross-country analysis. Journal of Financial Economics 68: 325–351.CrossRefGoogle Scholar
  32. Shleifer, A. 2000. Inefficient markets: An introduction to behavioral finance. Oxford: Oxford University Press.CrossRefGoogle Scholar
  33. Smith, Adam. 1776. An inquiry into the nature and causes of the wealth of nations. London: Ward, Lock, and Tyler.CrossRefGoogle Scholar
  34. Stout, Lynn. 2004. On the nature of corporations. Law & economics research paper no. 04-13. School of Law, UCLA.Google Scholar
  35. Varian, H. 1992. Microeconomic analysis. 3rd ed. New York: W. W. Norton.Google Scholar
  36. Williamson, O. 1964. The economics of discretionary behavior: Managerial objectives in a theory of the firm. Englewood Cliffs: Prentice Hall.Google Scholar
  37. Williamson, O. 1975. Markets and hierarchies: Analysis and antitrust implications. New York: Free Press.Google Scholar

Copyright information

© Macmillan Publishers Ltd. 2018

Authors and Affiliations

  • Randall Morck
    • 1
  1. 1.