Organizations as Internal Capital Markets: The Legal Boundaries of Firms, Collateral and Trusts in Commercial and Charitable Enterprises

IF 3.5 2区 社会学 Q1 LAW
Harvard Law Review Pub Date : 2004-02-01 DOI:10.2307/4093365
George G. Triantis
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引用次数: 32

Abstract

This paper explains a function of the legal boundaries of various organizations (such as corporations, security interests and trusts): they define internal capital markets within which capital may be redeployed over time by fiat and over which it may be moved only at greater cost and with greater difficulty. The option to switch capital allocations among available projects is valuable and its value can be enhanced when management of the option is delegated to an informed and loyal agent. However, if the switching option has low value, agents have little private information or agency costs are severe, the principal should constrain the ability of her agent to reallocate capital. She may accomplish this by shrinking the legal boundaries of the relevant internal capital markets: that is, by segregating projects into separate legal organizations. For example, a number of corporate, securities, tax and debtor-creditor law rules make switching between affiliate corporations significantly more costly than within a firm. Security interests and trusts also constrain capital budgeting flexibility. Indeed, the law provides a menu of instruments that, to varying degrees, remove from agents the discretion to adjust capital allocations among projects over time. The paper also examines the charitable sector: the prevailing information conditions and tax rules differ in important respects from those in the commercial sector and they raise interesting internal capital market issues. Capital budgeting flexibility in charities is constrained by charitable trust law principles. In both commercial and charitable sectors, intermediaries offer an attractive alternative solution to the agency tradeoff.
组织作为内部资本市场:商业和慈善企业中公司、抵押品和信托的法律边界
本文解释了各种组织(如公司、安全利益和信托)的法律边界的一个功能:它们定义了内部资本市场,在这个市场中,资本可以随着时间的推移通过法令重新部署,并且它可能只会以更高的成本和更大的困难转移。在现有项目之间切换资本分配的选择权是有价值的,当选择权的管理权下放给知情且忠诚的代理人时,其价值可以得到提高。然而,如果转换选项的价值较低,代理人的私人信息很少或代理成本严重,委托人应该限制其代理人重新配置资本的能力。她可以通过缩小相关内部资本市场的法律界限来实现这一目标:也就是说,通过将项目分离到单独的法律组织中。例如,许多公司法、证券法、税法和债务人-债权人法规则使得在关联公司之间转换的成本比在公司内部转换要高得多。证券权益和信托也限制了资本预算的灵活性。事实上,该法提供了一系列工具,在不同程度上剥夺了代理机构随时间调整项目间资本分配的自由裁量权。本文还考察了慈善部门:当前的信息条件和税收规则在重要方面与商业部门不同,它们提出了有趣的内部资本市场问题。慈善机构的资金预算灵活性受到慈善信托法律原则的制约。在商业和慈善部门,中介机构提供了一个有吸引力的替代解决方案,代理权衡。
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来源期刊
CiteScore
2.90
自引率
11.80%
发文量
1
期刊介绍: The Harvard Law Review is a student-run organization whose primary purpose is to publish a journal of legal scholarship. The Review comes out monthly from November through June and has roughly 2,500 pages per volume. The organization is formally independent of the Harvard Law School. Student editors make all editorial and organizational decisions and, together with a professional business staff of three, carry out day-to-day operations. Aside from serving as an important academic forum for legal scholarship, the Review has two other goals. First, the journal is designed to be an effective research tool for practicing lawyers and students of the law. Second, it provides opportunities for Review members to develop their own editing and writing skills. Accordingly, each issue contains pieces by student editors as well as outside authors. The Review publishes articles by professors, judges, and practitioners and solicits reviews of important recent books from recognized experts. All articles — even those by the most respected authorities — are subjected to a rigorous editorial process designed to sharpen and strengthen substance and tone.
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