by Despoina Chouliara
Abstract
In this paper I examine the principal/agency relationship in corporate governance and introduce it in a steady state growth model. More specifically, I will model a profit-maximizing privately-owned enterprise and a series of state-owned enterprises with varying economic goals. I will use the insights of agency theory to revisit the debate about public versus private ownership with the objective of exploring how ownership a↵ects a firm’s performance and whether the sole objective of profit-maximization is optimal for the firm and the aggregate economy. Hence, the scope of this paper is to enhance our understanding of the channels through which corporate governance influences the aggregate economy.
Professor Pietro Peretto, Faculty Advisor
Professor Michelle Connolly, Faculty Advisor
JEL Codes: D2, D21, O40
