An Institutional Analysis of Delaware Corporation Law-Based on Institutional Theory from Douglas North
| Autor: | Syun-Ya Jhao, 趙珣雅 |
|---|---|
| Rok vydání: | 2016 |
| Druh dokumentu: | 學位論文 ; thesis |
| Popis: | 104 One goal of corporate law is to deal with the agency problem between different members of a corporation, and Delaware corporate law dominates in the state corporate laws. Accordingly, this thesis focuses on the agency problem between shareholders and directors and analyzes how Delaware corporate law as an institution balances the authority and accountability of directors as agents. This thesis adopts the Douglass North''s institutional framework to analyze Delaware corporate law, and the framework includes three parts: 1. a theory of property right that describes the individual and group incentives in the system; 2. a theory of the state, since it is the state that specifies and enforces property rights; 3. a theory of ideology that explains how different perceptions of reality affect the reaction of individuals to the changing “objective” situation. Chapter one is a preface. Chapter two focuses on institutional economics and Douglass North''s institutional framework. Two topics are introduced: first, the reason institutions matter is that transaction costs exist and various institutions may reduce the transaction cost to improve transaction efficiency; second, the main transaction costs in an agency contract are the measuring cost and the monitoring cost. Chapter three focuses on the agency problem analysis. I introduce here that the reasons of the agency problem are information asymmetry and a conflict of interest between agents and principles, and the costs and problems may arise by dealing with the agency problem. Accordingly, Delaware corporate law applies different standards of review depending on seriousness of the agency problem, and therefore directors can remain the full discretion of business judgment but be restrained from abuse of power. Chapter four focuses on measuring cost and related Delaware court decisions. Institutional investors, proxy advisory firms and activist investors existing in the market help to reduce measuring cost. Accordingly, Delaware courts carefully review any board actions designed to impede the effective exercise of corporate democracy by shareholders, therefore protecting the stockholder franchise and negating unlawful efforts by the directors to maintain board control. Chapter five focuses on monitoring cost and related Delaware court decisions. Positive externality of shareholder litigation causes inadequate supervision on directors and attorney fee award is used for dealing with the problem of externalities. Attorney fee award provides attorneys incentives to supervise directors actively, but also causes problems such as frivolous litigation and collusion, and therefore the court intervention is needed. Chapter six focuses on the ideology of Delaware and the summary. Because of the existence of national incorporation market, corporations as buyers can purchase the corporate law produced by each state and states as sellers can sell corporate law to earn tax revenue. The tax revenue makes Delaware to invest its corporate law to response to the needs of corporations and the competitive pressure. |
| Databáze: | Networked Digital Library of Theses & Dissertations |
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