Unternehmensfinanzierung, Unternehmenskontrolle und Ressourcenallokation: Was leistet das Finanzsystem?

Martin Hellwig

No 97-02, Sonderforschungsbereich 504 Publications from Sonderforschungsbereich 504, Universität Mannheim, Sonderforschungsbereich 504, University of Mannheim

Abstract: The paper reviews the literature on the role of the financial system for corporate finance and control and takes stock of our understanding of the issues. Topics covered include the information efficiency of organized markets, the significance of information efficiency for corporate control, the role of financial intermediaries, the preponderance of internal finance, and the political economy of corporate control and finance. The paper questions the standard assumption that firms are willing to trade control for finance, or that such contracts if they are made are actually maintained. The paper suggests that the pre- ponderance of internal finance and the political system's willingness to support management control over assets and retentions are the major empirical phenomenon to be explained and analysed. It argues that these phenomena turn the financial systems of developed economies from systems channeling funds from households to firms into systems channeling funds from firms with excess cash flow to firms with excess investment opportunities. Existing theories, including Jensen's free-cash-flow hypothesis, do not provide a fully satisfactory account of the allocative implications of this structure.

Pages: 0 pages
Date: 1997-01-01
Note: Financial support from the Deutsche Forschungsgemeinschaft is gratefully acknowledged.
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