The Corporation: Growth, Diversification and Mergers

by Mueller; Dennis C.

• ISBN13: 9780415271356
• ISBN10: 0415271355
• Edition: 2nd
• Format: Hardcover
• Copyright: 2003-04-11
• Publisher: Routledge

Summary

This book reviews the theory of the firm and the large modern corporation. Examining the process of entrepreneurial capitalism in which firms come into existence, then managerial capitalism and the changing motives of management in corporations -The Corporationis a thorough and thoughtful account. Of interest to students and academics in the area, this book will also prove to be an intriguing read for professionals.

Author Biography

Dennis C. Mueller is Professor of Economics at the University of Vienna, Austria.

Table of Contents

Acknowledgments	xii
Introduction	1	(6)
The nature of profits	7	(6)
Uncertainty and profit	7	(2)
Mobility and profit	9	(1)
Information, mobility, and profit	10	(2)
Notes on the literature	12	(1)
The nature of the firm	13	(16)
The nature of a contract	13	(2)
The firm as an insurance contract	15	(2)
The firm as a coordination contract	17	(5)
The nature of the firm	22	(1)
Hierarchy in the firm	23	(1)
Conflicts between the firm's team members	24	(2)
Conclusions	26	(2)
Notes on the literature	28	(1)
The Schumpeterian firm	29	(34)
The product life cycle	29	(4)
The causes of shakeouts	33	(4)
Entry and exit	37	(7)
First-mover advantages and dynamic competition	44	(9)
First-mover disadvantages	53	(1)
The persistence of profits	53	(1)
First-mover advantages and the persistence of profits	54	(4)
Evolutionary models of firms and industries	58	(4)
Conclusions	62	(1)
Notes on the literature	62	(1)
The managerial corporation	63	(30)
The separation of ownership from control	63	(2)
The principal--agent problem	65	(3)
The goals of managers	68	(12)
The firm's life cycle	80	(2)
Constraints on managerial discretion	82	(6)
Managerial compensation	88	(3)
Conclusions	91	(2)
Corporate governance	93	(26)
Ownership and control around the world	94	(4)
The goals of corporate actors	98	(7)
The impact of managerial entrenchment	105	(3)
The impact of ownership identity	108	(2)
The impact of boards of directors	110	(1)
The importance of legal systems	110	(6)
Conclusions	116	(3)
Investment	119	(37)
The basic investment decision	119	(1)
The accelerator theory	120	(1)
Cash flow models	121	(6)
The neoclassical theory of investment	127	(1)
Expectations theories of investment	128	(1)
The neoclassical cost of capital and the Modigliani and Miller theorems	129	(6)
The capital asset pricing model (CAPM)	135	(6)
Empirical investigations of the determinants of investment	141	(4)
Rates of return on investment	145	(6)
Differences in qm across country legal systems and sources of funds	151	(4)
Conclusions	155	(1)
The determinants of mergers	156	(19)
Market power increases	158	(2)
Efficiency increases	160	(2)
Speculative motives	162	(1)
The adaptive (failing firm) hypothesis	163	(1)
The market for corporate control hypothesis	164	(1)
The economic disturbance hypothesis	165	(1)
Financial efficiencies	166	(2)
The capital redeployment hypothesis	168	(1)
The life-cycle-growth-maximization hypothesis	169	(1)
The winner's-curse-hubris hypothesis	170	(1)
The eclectic hypothesis	170	(1)
Testing competing hypotheses about the determinants of mergers	171	(4)
The effects of mergers	175	(33)
On profitability	175	(5)
On market shares and growth	180	(3)
Market power or efficiency?	183	(2)
Mergers effects on productivity	185	(1)
Mergers' effects on share prices -- methodological issues	185	(3)
The first wave -- 1972--83	188	(6)
The second wave -- post-1983	194	(11)
The motives of managers once again	205	(1)
Conclusions	206	(2)
Conclusion	208	(5)
The future of the corporation and the future of capitalism	208	(1)
The future of corporation	208	(3)
The future of corporate capitalism	211	(2)
Notes	213	(9)
References	222	(19)
Name index	241	(6)
Subject index	247