Access

You are not currently logged in.

Access your personal account or get JSTOR access through your library or other institution:

login

Log in to your personal account or through your institution.

If you need an accessible version of this item please contact JSTOR User Support

Corporate Finance and Corporate Governance

Oliver E. Williamson
The Journal of Finance
Vol. 43, No. 3, Papers and Proceedings of the Forty-Seventh Annual Meeting of the American Finance Association, Chicago, Illinois, December 28-30, 1987 (Jul., 1988), pp. 567-591
Published by: Wiley for the American Finance Association
DOI: 10.2307/2328184
Stable URL: http://www.jstor.org/stable/2328184
Page Count: 25
  • Read Online (Free)
  • Download ($33.95)
  • Subscribe ($19.50)
  • Cite this Item
If you need an accessible version of this item please contact JSTOR User Support
Corporate Finance and Corporate Governance
Preview not available

Abstract

A combined treatment of corporate finance and corporate governance is herein proposed. Debt and equity are treated not mainly as alternative financial instruments, but rather as alternative governance structures. Debt governance works mainly out of rules, while equity governance allows much greater discretion. A project-financing approach is adopted. I argue that whether a project should be financed by debt or by equity depends principally on the characteristics of the assets. Transaction-cost reasoning supports the use of debt (rules) to finance redeployable assets, while non-redeployable assets are financed by equity (discretion). Experiences with leasing and leveraged buyouts are used to illustrate the argument. The article also compares and contrasts the transaction-cost approach with the agency approach to the study of economic organization.

Page Thumbnails

  • Thumbnail: Page 
567
    567
  • Thumbnail: Page 
568
    568
  • Thumbnail: Page 
569
    569
  • Thumbnail: Page 
570
    570
  • Thumbnail: Page 
571
    571
  • Thumbnail: Page 
572
    572
  • Thumbnail: Page 
573
    573
  • Thumbnail: Page 
574
    574
  • Thumbnail: Page 
575
    575
  • Thumbnail: Page 
576
    576
  • Thumbnail: Page 
577
    577
  • Thumbnail: Page 
578
    578
  • Thumbnail: Page 
579
    579
  • Thumbnail: Page 
580
    580
  • Thumbnail: Page 
581
    581
  • Thumbnail: Page 
582
    582
  • Thumbnail: Page 
583
    583
  • Thumbnail: Page 
584
    584
  • Thumbnail: Page 
585
    585
  • Thumbnail: Page 
586
    586
  • Thumbnail: Page 
587
    587
  • Thumbnail: Page 
588
    588
  • Thumbnail: Page 
589
    589
  • Thumbnail: Page 
590
    590
  • Thumbnail: Page 
591
    591