Scheda di revisione: Les mécanismes de gouvernance d'entreprise

📋 Plan du Cours

1. The Agency Problem
2. Financing Without Governance
3. Legal Protection for Investors
4. Role of Large Investors
5. Role of Large Creditors
6. Costs of Large Investors
7. Specific Governance Arrangements
8. Debt Versus Equity Choice
9. Leveraged Buyouts (LBOs
10. Cooperatives and State Ownership
11. Comparing Governance Systems
12. Conclusion on Corporate Governance Research

📖 1. The Agency Problem

🔑 Notions clés & Définitions

• Contractual view of the firm : A theory of the firm in which the relationship between manager and financiers is governed by contracts that allocate actions and returns.
• Separation of ownership and control : Fama, Eugene, and Michael Jensen, 1983a, Separation of ownership and control, Journal of Law and

📝 Points essentiels

• An entrepreneur or manager raises funds from investors either to put them to productive use or to cash out part of his holdings in the firm.
• The basic contract specifies what the manager does with the funds and how the returns are divided between him and the financiers.
• A complete contract would specify exactly what the manager does in all states of the world and how profits are allocated, but such contracts are technologically infeasible because most future contingencies are hard to describe and foresee.
• Governance 741 get anything but a worthless piece of paper back from the manager? The agency problem in this context refers to the difficulties financiers have in assuring that their funds are not expropriated or wasted on unattractive projects. In most general terms, the financiers and the manager sign a contract that specifies what the manager does with the funds, and how the returns are divided between him and the financiers. Ideally, they would sign a complete contract, that specifies exactly what the manager does in all states of the world, and how the profits are allocated. The trouble is, most future contin- gencies are hard to describe and foresee, and as a result, complete contracts are technologically infeasible. This problem would not be avoided even if the manager is motivated to raise as much funds as he can, and so tries hard to accommodate the financiers by developing a complete contract. Because of these problems in designing their contract, the manager and the financier have to allocate residual control rights-i.e., the rights to make decisions in circum- stances not fully foreseen by the contract (Grossman and Hart (1986), Hart and Moore (1990)). The theory of ownership addresses the question of how these residual control rights are allocated efficiently. In principle, one could imagine a contract in which the financiers give funds to the manager on the

💡 À retenir

Corporate governance is framed as a financing problem created by the split between those who supply capital and those who control it. The central issue is how to assure financiers that they will get a return on their investment despite managerial discretion.

📖 2. Financing Without Governance

🔑 Notions clés & Définitions

• Separation of financing and management : The division in firms between those who provide funds and those who run the firm, which is the scope of the survey’s discussion of corporate governance.
• Financial intermediaries : Institutions whose governance role is discussed, while their function as collectors of savings from the public is explicitly ignored.

📝 Points essentiels

• The survey pays some attention to cooperatives, but it does not focus on worker ownership or nonprofit organizations.
• The survey discusses financial intermediaries only in their governance role and ignores their role as collectors of savings from the public.
• The survey deals with how the separation of financing and management of firms is handled in theory and in practice.
• Most of the available empirical evidence in English comes from the United States, with additional evidence from Japan, Germany, Italy, Sweden, and Russia.

💡 À retenir

The survey’s scope is limited to the separation of financing and management in firms, not to the full range of noncapitalist ownership forms. Its empirical base is uneven because the English-language evidence is concentrated in a small set of countries.

📖 3. Legal Protection for Investors

🔑 Notions clés & Définitions

• Shareholder voting rights : Supplemented by an affir- mative duty of loyalty of the managers to shareholders.
• Legal protection of investors : Corporate governance arrangement in which legal rights and concentrated ownership work together, because legal protection alone is often insufficient and large investors need basic legal rights to exercise control over management.

📝 Points essentiels

• Differences in corporate governance across countries largely reflect differences in managers’ legal obligations to financiers and in how courts interpret and enforce those obligations.
• Even in developed countries, managers may interfere with voting by pressuring shareholders, concealing information, or manipulating the voting process.
• In weaker legal systems, shareholder voting rights are violated more flagrantly, although courts may still protect a large shareholder in specific cases.

💡 À retenir

Investor protection depends not only on formal legal rights but also on courts and procedures that make those rights usable. Voting rights are central, yet they are costly to exercise and can be undermined by managerial interference or weak enforcement.

📖 4. Role of Large Investors

🔑 Notions clés & Définitions

• Clear : They have both the interest in getting their money back and the power to demand it.
• Large investors : Using this general framework, we discuss several potential costs of having large investors: straightforward expropriation of other inves- tors, managers, and employees;
• Control rights : Concentrated in the hands of a small number of investors with a collectively large cash flow stake, concerted action by investors is much easier than when control rights, such as votes, are split among many of them.

📝 Points essentiels

• The survey treats ownership concentration as one of the two most common approaches to corporate governance, alongside legal protection from expropriation by managers.
• Large investors are discussed as a response to the fact that legal protection alone becomes insufficient to ensure that investors get their money back in many countries.
• Governance 739 power. Specifically, we consider reputation-building in the capital market and excessive investor optimism, and conclude that these are unlikely to be the only reasons why investors entrust capital to firms. Sections III and IV then turn to the two most common approaches to corporate governance, both of which rely on giving investors some power. The first approach is to give investors power through legal protection from expro- priation by managers. Protection of minority rights and legal prohibitions against managerial self-dealing are examples of such mechanisms. The second major approach is ownership by large investors (concentrated ownership): matching significant control rights with significant cash flow rights. Most corporate governance mechanisms used in the world-including large share holdings, relationship banking, and even takeovers- can be viewed as exam- ples of large investors exercising their power. We discuss how large investors reduce agency costs. While large investors still rely on the legal system, they do not need as many rights as the small investors do to protect their interests. For this reason, corporate governance is typically exercised by large investors. Despite its common use, concentrated ownership has its costs as well, which can be best described as potential expropriation by large investors of other investors and stakeholders in the

💡 À retenir

The section presents concentrated ownership as a central governance mechanism because it can give investors enough power to influence managers when legal protection alone is not sufficient. Large investors are therefore described as a practical complement to legal rights in effective corporate governance systems.

📖 5. Role of Large Creditors

🔑 Notions clés & Définitions

• Banks : A type of significant creditor that may hold equity votes and is discussed as a potential monitor, although the empirical evidence for this governance role remains scarce.
• Large shareholders : Outside investors with substantial minority ownership stakes whose concentrated shareholdings are the most direct way to align cash flow and control rights.
• Unlike creditors : Shareholders who have no claim to specific assets of the firm, no right to pull the collateral, and no final date at which the firm is liquidated and the proceeds are distributed.

📝 Points essentiels

• Creditors can use default-related rights such as pulling collateral or forcing liquidation to affect managerial behavior after default.
• The governance role of creditors is tied to contractual breach and distress, unlike shareholders whose rights are not triggered by default in the same way.
• The text treats banks and other large creditors as potential monitors, but notes that the empirical evidence for their role remains scarce and that their incentives may weaken discipline when the firm is far from default.
• Governance 763 Several other articles model the costs and benefits of the debt contract. The benefit is usually the reduction in the agency cost, such as preventing the manager from investing in negative net present value projects, or forcing him to sell assets that are worth more in alternative use. The main costs of debt are that firms may be prevented from undertaking good projects because debt covenants keep them from raising additional funds, or else they may be forced by creditors to liquidate when it is not efficient to do so. Stulz (1990), Diamond (1991), Harris and Raviv (1990), and Hart and Moore (1995) present some of the main models incorporating these ideas, whereas Lang, Ofek, and Stulz (1996) present evidence indicating that leverage indeed curtails investment by firms with poor prospects. Williamson (1988) and Shleifer and Vishny (1992) argue that liquidations might be particularly costly when alternative use of the asset is limited or when the potential buyers of the asset cannot raise funds themselves. Dewatripont and Tirole (1994) derive the optimal amount of debt in a model where the tough negotiating stance of debt holders after default deters managerial shirking ex ante. The model explains how the cash flow structure of debt as senior claimant with little upside potential makes debt holders tough on managers after a default. This makes it optimal to

💡 À retenir

Creditors can use default-related rights such as pulling collateral or forcing liquidation to affect managerial behavior after default.

📖 6. Costs of Large Investors

🔑 Notions clés & Définitions

• Private benefits of control : avantages privés tirés de l’exercice du contrôle, lorsque le détenteur du contrôle utilise ses droits pour poursuivre des projets qui lui profitent plutôt qu’aux investisseurs.
• Costs of Large Investors : ensemble des coûts liés à la concentration de la propriété, notamment quand les grands investisseurs servent leurs propres intérêts au lieu de ceux des autres investisseurs, des employés ou des managers.
• large investors : investisseurs importants qui détiennent un pouvoir de contrôle et peuvent demander le retour de leurs fonds.
• large investors are : investisseurs qui peuvent être trop peu diversifiés, représenter leurs propres intérêts, et ne pas contraindre automatiquement les managers à maximiser les profits et à les reverser.

📝 Points essentiels

• Les banques peuvent n’avoir aucun intérêt à discipliner les managers et peuvent au contraire chercher à les ménager pour obtenir davantage d’affaires, tant que l’entreprise est loin du défaut.
• Les grands investisseurs peuvent être trop indulgents parce qu’ils peuvent ne pas mettre fin à des projets non rentables lorsque la poursuite du projet est préférée à la liquidation.
• Un grand investisseur peut préférer les avantages privés du contrôle à la maximisation de la valeur totale de l’entreprise.
• Ces problèmes impliquent que les grands investisseurs ne forcent pas automatiquement les managers à maximiser les profits et à les distribuer.

💡 À retenir

La concentration de la propriété ne garantit pas une meilleure discipline des dirigeants : les grands investisseurs peuvent être capturés, trop conciliants ou agir pour leur propre intérêt. Ils peuvent donc échouer à imposer la maximisation des profits et leur redistribution aux investisseurs.

📖 7. Specific Governance Arrangements

🔑 Notions clés & Définitions

• Corporate governance : The set of mechanisms used to assure that investors can collect their returns from firms, with legal protection and concentrated ownership playing central roles.
• Governance system : An organizational framework for corporate control that combines legal protection and concentrated ownership with specific mechanisms such as debt governance, equity governance, leveraged buyouts, and state enterprises.
• Bankruptcy : Gilson, Stuart, 1990, Bankruptcy, boards, banks, and block

📝 Points essentiels

• Debt is treated as a governance mechanism because creditors can obtain control rights when covenants are violated or payments are missed.
• Governance 763 Several other articles model the costs and benefits of the debt contract. The benefit is usually the reduction in the agency cost, such as preventing the manager from investing in negative net present value projects, or forcing him to sell assets that are worth more in alternative use. The main costs of debt are that firms may be prevented from undertaking good projects because debt covenants keep them from raising additional funds, or else they may be forced by creditors to liquidate when it is not efficient to do so. Stulz (1990), Diamond (1991), Harris and Raviv (1990), and Hart and Moore (1995) present some of the main models incorporating these ideas, whereas Lang, Ofek, and Stulz (1996) present evidence indicating that leverage indeed curtails investment by firms with poor prospects. Williamson (1988) and Shleifer and Vishny (1992) argue that liquidations might be particularly costly when alternative use of the asset is limited or when the potential buyers of the asset cannot raise funds themselves. Dewatripont and Tirole (1994) derive the optimal amount of debt in a model where the tough negotiating stance of debt holders after default deters managerial shirking ex ante. The model explains how the cash flow structure of debt as senior claimant with little upside potential makes debt holders tough on managers after a default. This makes it optimal to
• Governance 765 Because the equity holders have voting power and legal protection of minor- ity shareholders, they have the ability to extract some payments from the managers in the form of dividends. Easterbrook (1984) articulates the agency theory of dividend payments, in which dividends are for equity what interest is for debt: pay out by the managers supported by the control rights of the financiers, except in the case of equity these control rights are the voting rights. More recently, Fluck (1995) and Myers (1995) present agency-theoretic models of dividends, based on the idea that shareholders can threaten to vote to fire managers or liquidate the firm, and therefore managers pay dividends to hold off the shareholders. These models do not explicitly address the free rider problem between shareholders; namely, how do they manage to organize themselves to pose a threat to the management when they are small and dispersed? Concentration of equity ownership, or at least the threat of such concentration, must be important to get companies to pay dividends. One of the fundamental questions that the equity contracts raise is how- given the weakness of control rights without concentration- do firms manage to issue equity in any substantial amounts at all? Equity is the most suitable financing tool when debt contracts are difficult to enforce, i.e., when no specific collateral can

💡 À retenir

Debt is treated as a governance mechanism because creditors can obtain control rights when covenants are violated or payments are missed.

📖 8. Debt Versus Equity Choice

🔑 Notions clés & Définitions

• Debt versus equity choice : The Debt Versus Equity Choice Recent years saw a veritable flood of research on the debt contract as a mechanism for solving agency problems.
• Debt and equity : In particular, we now focus on debt and equity as instruments of finance.

📝 Points essentiels

• In the newer governance literature, debt is defined by the lender’s control rights, not merely by its cash-flow pattern.
• Equity is contrasted with debt because the governance value of debt comes from enforcement and control, not just financing structure.
• Governance 757 Last but not least, hostile takeovers are politically an extremely vulnerable mechanism, since they are opposed by the managerial lobbies. In the United States, this political pressure, which manifested itself through state anti- takeover legislation, contributed to ending the 1980s takeovers (Jensen (1993)). In other countries, the political opposition to hostile takeovers in part explains their general nonexistence in the first place. The takeover solution practiced in the United States and the United Kingdom, then, is a very imperfect and politically vulnerable method of concentrating ownership. C. Large Creditors Significant creditors, such as banks, are also large and potentially active investors. Like the large shareholders, they have large investments in the firm, and want to see the returns on their investments materialize. Their power comes in part because of a variety of control rights they receive when firms default or violate debt covenants (Smith and Warner (1979)) and in part because they typically lend short term, so borrowers have to come back at regular, short intervals for more funds. As a result of having a whole range of controls, large creditors combine substantial cash flow rights with the ability to interfere in the major decisions of the firm. Moreover, in many countries, banks end up holding equity as well as debt of the firms they invest
• In this new work, unlike in the Modigliani-Miller (1958) framework, where debt is associated only with a particular pattern of cash flows, the defining feature of debt is the ability of creditors to exercise control.

💡 À retenir

This section redefines the debt-equity distinction around control rather than only promised payments. Debt matters because creditor rights and enforcement can change corporate decisions, especially when covenants are violated.

📖 9. Leveraged Buyouts (LBOs

🔑 Notions clés & Définitions

📝 Points essentiels

• The section places leveraged buyouts among governance mechanisms because they combine financing and control rather than serving as ordinary capital structure choices.
• LBOs fit the survey’s broader theme because leverage can strengthen control over managers through creditor discipline.
• The section belongs with the discussion of debt as a governance mechanism rather than with ordinary capital structure theory.
• LBOs are relevant as a specific arrangement where financing and control are tightly linked.
• Governance 767 managenment. Bhagat, Shleifer, and Vishny (1990) argue that the principal purpose of LBOs in the 1980's was to serve as a temporary financing tool for implementation of drastic short-run improvements, such as divestitures. Kaplan (1991) looks empirically at the question of whether LBOs are perma- nent organizations, or whether, alternatively, they eventually return to the public equity market. His evidence suggests that, while LBOs are not very short lived organizations, the median firm sells equity to the public within five to six years. Although this suggests that LBOs are not permanent organiza- tions, Kaplan also finds that even those firms issuing equity to the public retain a very heavy concentration of both debt and equity ownership. Large investors remain even when the original financing structure is too tough to be permanent. C. Cooperatives and State Ownership We have suggested that, in some situations, concentrated ownership may not be optimal because nonshareholder constituencies such as managers, employees, and consumers are left with too few rents, and too little incentive to make relationship-specific investments. In these situations, cooperatives might be a more efficient ownership structure (Hansmann (1988), Hart and Moore (1994b)). For example, private firms with large investors might under- provide quality or otherwise shortchange the firm's
• Governance 747 lowest among firms with low Tobin's Qs and high cash flows. Their result supports Jensen's (1986) version of agency theory, in which the worst agency problems occur in firms with poor investment opportunities and excess cash. In sum, quite a bit of evidence points to the dominance of managerial rather than shareholder motives in firms' acquisition decisions. Even clearer evidence of agency problems is revealed by the studies that focus on managers directly threatened with the loss of private benefits of control. These are the studies of management resistance to takeovers, which are now too numerous to survey completely. Walkling and Long (1984) find that managerial resistance to value-increasing takeovers is less likely when top managers have a direct financial interest in the deal going through via share ownership or golden parachutes, or when top managers are more likely to keep their jobs. Another set of studies finds that, when managers take anti-takeover actions, shareholders lose. For example, DeAngelo and Rice (1983) and Jarrell and Poulsen (1988a) find that public announcements of certain anti-takeover amendments to corporate charters, such as super-major- ity provisions requiring more than 50 percent of the votes to change corporate boards, reduce shareholder wealth. Ryngaert (1988) and Malatesta and Walkling (1988) find that, for firms who have

💡 À retenir

Leveraged buyouts are treated as a hybrid governance device built around heavy debt use. They matter because they tie financing to control and show both the advantages and the costs of concentrated ownership.

📖 10. Cooperatives and State Ownership

🔑 Notions clés & Définitions

• State ownership : A similar argument has been used to justify state ownership of firms.

📝 Points essentiels

• The survey pays some attention to cooperatives but does not focus on a broad variety of noncapitalist ownership patterns.
• Worker ownership and nonprofit organizations are explicitly named as outside the main focus, even though they belong to the same family of ownership forms.
• The article’s central concern is how ownership structure affects the ability of suppliers of finance to control managers and secure a return on their investment.
• Governance 765 Because the equity holders have voting power and legal protection of minor- ity shareholders, they have the ability to extract some payments from the managers in the form of dividends. Easterbrook (1984) articulates the agency theory of dividend payments, in which dividends are for equity what interest is for debt: pay out by the managers supported by the control rights of the financiers, except in the case of equity these control rights are the voting rights. More recently, Fluck (1995) and Myers (1995) present agency-theoretic models of dividends, based on the idea that shareholders can threaten to vote to fire managers or liquidate the firm, and therefore managers pay dividends to hold off the shareholders. These models do not explicitly address the free rider problem between shareholders; namely, how do they manage to organize themselves to pose a threat to the management when they are small and dispersed? Concentration of equity ownership, or at least the threat of such concentration, must be important to get companies to pay dividends. One of the fundamental questions that the equity contracts raise is how- given the weakness of control rights without concentration- do firms manage to issue equity in any substantial amounts at all? Equity is the most suitable financing tool when debt contracts are difficult to enforce, i.e., when no specific collateral can
• In addition, we discuss state ownership-a particular organizational form that, for reasons discussed in this article, is rarely conducive to efficiency.

💡 À retenir

This section separates cooperatives and other noncapitalist ownership forms from the survey’s main focus, while treating state ownership as a distinct governance arrangement. The core issue remains how ownership structure shapes control over managers and the return to financiers.

📖 11. Comparing Governance Systems

🔑 Notions clés & Définitions

• Legal protection : Large Investors Our analysis leads us to conclude that both the legal protection of investors and some form of concentrated ownership are essential elements of a good corporate governance system.

📝 Points essentiels

• Corporate governance systems differ across countries mainly because legal protection of investors differs.
• Ownership concentration is another major source of cross-country variation in governance.
• Japan, Germany, Italy, Sweden, and Russia are used as additional reference points, but systematic research is much thinner outside these cases.
• Governance 773 informed investors. These investors may be better able to help distressed firms as well. Still, there are serious questions about the effectiveness of these investors, largely because their toughness is in doubt. As Charkham (1994) has shown, German banks are large public institutions that effectively control themselves. There is little evidence from either Japan or Germany that banks are very tough in corporate governance. Finally, at least in Germany, large- investor-oriented governance system discourages small investors from partic- ipating in financial markets. In sum, despite a great deal of controversy, we do not believe that either the theory or the evidence tells us which of the three principal corporate governance systems is the best. In this regard, we are not surprised to see political and economic pressures for the three systems to move toward each other, as exemplified by the growing popularity of large share- holders in the United States, the emergence of public debt markets in Japan, and the increasing bank-bashing in Germany. At the same time, in thinking about the evolution of governance in transition economies, it is difficult to believe that either significant legal protection of investors or takeovers are likely to play a key role. In all likelihood, then, unless Eastern Europe is stuck with insider domination and no private exter- nal finance
• Successful corporate governance systems, such as those of the United States, Germany, and Japan, combine significant legal protection of at least some investors with an important role for large investors.

💡 À retenir

Cette section compare les systèmes de gouvernance des entreprises à partir de la protection juridique des investisseurs et de la concentration de la propriété. Elle souligne aussi que l’évidence empirique est très inégale selon les pays, avec une forte focalisation sur les États-Unis.

📖 12. Conclusion on Corporate Governance Research

🔑 Notions clés & Définitions

• CORPORATE GOVERNANCE : Only enlightens the discussion of perhaps marginal improvements in rich econo- mies, but can also stimulate major institutional changes in places where they need to be made.
• Empirical evidence : Although there has been a great deal of theoretical discussion of governance by large creditors, the empirical evidence of their role remains scarce.

📝 Points essentiels

• The survey presents corporate governance as a subject of enormous practical importance.
• The article stresses that advanced market economies have solved the governance problem only reasonably well, not perfectly.
• The survey repeatedly notes the scarcity of systematic research on corporate governance in most countries.
• The conclusion implied by the survey is that governance mechanisms can still be improved, even where capital markets function well.
• Governance 739 power. Specifically, we consider reputation-building in the capital market and excessive investor optimism, and conclude that these are unlikely to be the only reasons why investors entrust capital to firms. Sections III and IV then turn to the two most common approaches to corporate governance, both of which rely on giving investors some power. The first approach is to give investors power through legal protection from expro- priation by managers. Protection of minority rights and legal prohibitions against managerial self-dealing are examples of such mechanisms. The second major approach is ownership by large investors (concentrated ownership): matching significant control rights with significant cash flow rights. Most corporate governance mechanisms used in the world-including large share holdings, relationship banking, and even takeovers- can be viewed as exam- ples of large investors exercising their power. We discuss how large investors reduce agency costs. While large investors still rely on the legal system, they do not need as many rights as the small investors do to protect their interests. For this reason, corporate governance is typically exercised by large investors. Despite its common use, concentrated ownership has its costs as well, which can be best described as potential expropriation by large investors of other investors and stakeholders in the
• Most advanced market economies have solved the problem of corporate governance at least reasonably well, in that they have assured the flows of enormous amounts of capital to firms, and actual repatriation of profits to the providers of finance.

💡 À retenir

La conclusion fait de la gouvernance d’entreprise un agenda de recherche: le problème reste imparfaitement résolu, y compris dans les économies de marché avancées. L’étude souligne aussi que la base de preuves systématiques demeure limitée dans la plupart des pays.

🧩 Compléments de couverture

1. La revue s’appuie sur une référence fondatrice du contrat de firme : Coase (1937), Jensen and Meckling (1976) et Fama and Jensen (1983a,b).
2. Les droits de contrôle résiduels sont les droits de décision dans les circonstances non prévues par le contrat.
3. Le rôle des tribunaux varie fortement selon les pays : aux États-Unis, le business judgment rule limite l’intervention judiciaire, alors qu’ailleurs les tribunaux n’interviennent souvent qu’en cas de violations massives.
4. Les droits de vote des actionnaires sont coûteux à exercer et à faire respecter, ce qui favorise l’abstention des petits investisseurs.
5. Dans les pays à système juridique faible, les managers peuvent empêcher ou fausser le vote des actionnaires par diverses pressions et manipulations.
6. La structure des conseils d’administration varie selon les pays, allant des conseils à deux niveaux en Allemagne aux conseils dominés par les initiés au Japon.
7. Les conseils d’administration n’agissent souvent qu’en cas de catastrophe de performance, même lorsqu’ils sont dominés par des administrateurs externes.
8. Le devoir de loyauté des dirigeants inclut notamment l’interdiction du self-dealing, comme le vol, la rémunération excessive ou l’émission de titres au profit des dirigeants et de leurs proches.
9. Les restrictions légales peuvent aussi imposer la consultation du conseil avant les grandes décisions ou offrir des recours d’évaluation pour bloquer des ventes d’actifs à bas prix.
10. Un grand investisseur peut aussi privilégier ses bénéfices privés de contrôle au détriment des autres actionnaires s’il ne détient pas 100 % de l’entreprise.
11. La dette comporte souvent des covenants, par exemple l’obligation de maintenir la valeur des actifs dans l’entreprise.
12. En cas de défaut, le prêteur peut reprendre des actifs en garantie ou pousser l’entreprise à la faillite.
13. Les modèles de dette de Townsend et Gale-Hellwig montrent que le défaut déclenche une enquête sur les comptes et le contrôle des actifs.
14. 180 on Sat, 18 Feb 2023 15:46:23 UTC All use subject to https://about.
15. Gorton and Schmid (1996) show that bank block holders improve the perfor- mance of German companies in their 1974 sample, and that both bank and nonbank block holders improve performance in a 1985 sample.
16. 737-783 Published by: Wiley for the American Finance Association Stable URL: https://www.
17. Contracts The agency problem is an essential element of the so-called contractual view of the firm, developed by Coase (1937), Jensen and Meckling (1976), and Fama and Jensen (1983a,b).
18. Over an 11-year period between 1982 and 1992, only 123 firms went public in Italy, compared to several thousand in the United States.

📅 Repères chronologiques

Date	Événement
1986	Residual control rights theory
1990	Hart and Moore on control rights
1991	Kaplan on LBOs
1995	Legal protection and governance
1996	Bank block holders performance
1988	Hansmann on cooperatives

📊 Tableaux de Synthèse

Governance mechanisms and what they do

Mechanism	Core idea	Main issue
Legal protection	Gives investors power through legal rights	Rights can be costly to exercise or weakly enforced
Concentrated ownership	Matches significant control rights with cash flow rights	Large investors can be captured or pursue private benefits
Debt governance	Creditors gain control rights when covenants are violated or payments are missed	Debt can block good projects or limit new financing
LBOs	Combine financing and control	Often temporary; heavy debt and equity concentration may remain

Ownership structures and governance tradeoffs

Structure	When it helps	Main drawback
Large investors	When legal protection alone is insufficient	May expropriate others or favor private control benefits
Cooperatives	When nonshareholder constituencies need rents and incentives	Not presented as optimal in all situations
State ownership	A specific governance arrangement in the survey	Included among governance systems, not a universal solution

⚠️ Pièges & Confusions Fréquentes

1. Confusing legal protection with concentrated ownership: the survey treats them as two distinct main approaches to governance.
2. Assuming large investors always improve discipline: they can be too lenient, captured, or seek private benefits of control.
3. Treating debt only as a financing choice: here debt is also a governance mechanism through creditor control rights.
4. Thinking LBOs are ordinary capital structure choices: the text places them among governance mechanisms linking financing and control.
5. Equating complete contracts with feasible contracts: complete contracts are described as technologically infeasible because future contingencies are hard to foresee.
6. Assuming voting rights alone are enough: investor protection also depends on courts and procedures that make rights usable.

✅ Checklist Examen

1. Define the agency problem as the risk that financiers are expropriated or funds are wasted.
2. Explain why complete contracts are infeasible in the contractual view of the firm.
3. State that residual control rights matter when contracts do not foresee all contingencies.
4. Distinguish legal protection from concentrated ownership as the two main governance approaches.
5. Recall that voting rights can be costly to exercise and weakened by managerial interference.
6. Describe how large investors can reduce agency costs but also create new costs.
7. Explain why creditors can obtain control rights when covenants are violated or payments are missed.
8. Know that debt can both discipline managers and prevent good projects or new financing.
9. Place LBOs in the governance discussion because they combine financing and control.
10. Remember that cooperatives may be more efficient when nonshareholder constituencies need incentives.