Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/85919 
Year of Publication: 
2003
Series/Report no.: 
Tinbergen Institute Discussion Paper No. 03-096/2
Publisher: 
Tinbergen Institute, Amsterdam and Rotterdam
Abstract: 
In this paper we analyze an entrepreneur /manager's choice between private and public ownership in a setting in which management needs some elbow room or autonomy to optimally manage the firm. In public capital markets, the corporate governance regime in place exposes the firm to exogenous controls, so that management may lack the autonomy it desires. By contrast, private ownership can provide management the desired autonomy due to the possibility of precisely-calibrated private contracting. The disadvantage of private ownership (relative to public ownership) is that it imposes a cost of illiquidity on those who provide financing. We explore this tradeoff between managerial autonomy and the cast of capital in a simple setting and draw a number of new testable implications.
Subjects: 
Ownership Structure
Stockmarket Listing
JEL: 
D83
G30
G32
Document Type: 
Working Paper

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