SAIF Seminar Series (14)
Topic: SAIF Seminar Series (14)
Time: Wednesday , 2010-09-15 12:00-08:00
Speaker: William Bradford
Affiliations: University of Washington
SAIF Seminar Series (14)
星期四,2010-09-15 10:30-12:00
Room 505, Datong Building, 211 West Huaihai Road, SAIF
William Bradford

Hire Ed to Run the Firm or Run the Firm Myself?


Jensen and Meckling (1976) explore management agency costs, which emanate from the principal-agent relationship that separates the ownership from the management (control) of the firm. An owner (principal) of a closely held firm can either hire someone to manage her firm (agent) or can run the firm herself. The owner’s goal in this decision is to maximize her own welfare, not the value of the firm. Owner welfare maximization and firm value maximization can be inconsistent in this decision, leading to external agency costs, which are different from the internal agency costs explored by Jensen and Meckling. We use this distinction to examine the definition and empirical measurement of management agency costs for closely held firms.
Speaker Personal Information:
Research Interests Corporate Finance, Financial Institutions, and Minority and Small Business.