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Professorial Fellowship: Leadership, Change, and Corporate Governance.

Subject

Organisational Behaviour, Entrepreneurship

Publication Year

2003

Abstract

I shall build models that link corporate finance to the key questions of mainstream economics research, using both standard agency-theoretic models of the separation of owners hip and control, and models that capture insights from other fields such as management and organisational behaviour. Within this overall theme are four specific topics. One is leadership, which I believe to be an important component of organisational behaviour although traditionally ignored in economics. A second topic is economic modelling of organisational change, exploring whether firms change too little or too much, and how optimal incentive contracting and capital structure can be used to implement change. A third topic is the effects of manager/shareholder agency problems on investment and thereby on broader economic issues such as interest rates and asset pricing. I shall investigate the effect of corporate free-cash-flow overinvestment problems on aggregate investment demand and the asset pricing kernel. A fourth topic is whether financial markets produce systematic distortions in the type of information that is produced, including short-termism and other problems in the relationship between the firm and shareholders. The motivation for this research is that I feel there is a wide gap between the reality of firm behaviour and the models of firms that serve as building blocks for standard economic analysis. I shall go beyond the boundaries of traditional economics, studying research on organisational change and organisational behaviour and integrating this material into the economics and corporate finance literature. As well as introducing new models of group behaviour, an aim of this part of the research is to generalise corporate finance models, which tend to rely on describing relations between a single manager and the owner (or group of claimholders), and to also incorporate analysis of the relationships between a larger number of agents within the firm

Award Type

Professorial Fellowship

Publication Contact

Richard Frost

Publication Email

rfrost@london.edu

Publication Contact

Richard Frost

Project Funder

ESRC

Project Length

36

Publication Research Centre

Institute of Finance and Accounting, Entrepreneurship

Researchers

Dow J

Available on ECCH

No

Start Date

10/01/2003


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