Private or public? A taxonomy of optimal ownership and management regimes
We develop a theory that explains the difference between public and private ownership for the case of firms that are well approximated by an owner\managed or closely held form of firm. The theory is based on government monitoring and control of actions that potentially allow managers to divert value to themselves. More ‘public’ firms are synonymous with greater control of such actions, but generate greater bureaucracy costs. Therefore managers of public firms face flatter commercial incentives...[Show more]
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