Agency Problems and the Theory of the Firm

  title={Agency Problems and the Theory of the Firm},
  author={Eugene F. Fama},
  journal={Journal of Political Economy},
  pages={288 - 307}
  • E. Fama
  • Published 1 April 1980
  • Economics
  • Journal of Political Economy
This paper attempts to explain how the separation of security ownership and control, typical of large corporations, can be an efficient form of economic organization. We first set aside the presumption that a corporation has owners in any meaningful sense. The entrepreneur is also laid to rest, at least for the purposes of the large modern corporation. The two functions usually attributed to the entrepreneur--management and risk bearing--are treated as naturally separate factors within the set… 

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