We analyze systematically the legal regulations on self-dealing transactions (where controlling shareholders are an interested party to transactions undertaken by the firm) and compare the outcomes produced by these regimes, both in terms of total welfare generated by the firm, and of minority expropriation, with the outcome that can be achieved with a contractual solution.
We prove that investment eciency and welfare can be increased by letting the interested parties enter into long-term contracts regulating private benefit extraction and, as an example, we propose a simple contract based on the use of options that is more efficient than existing regulations.
Controlling shareholders have been directly involved in some of the largest and most consequential bribery scandals in the world over the course of the...
Using natural language processing, we identify and categorize the corporate goals in the shareholder letters of the 150 largest companies in the United...