第十公司治理(纽约大学艾伦和盖尔金融经济学讲义)

Chapter10Corporate Governance10.1The market for corporate controlThe agency problem that arises from the separation of ownership and control (Berle and Means,1932)has been a major focus of the literature on corporate finance and the theory of thefirm over the last twenty years.Various insti-tutional arrangements exist to deal with this agency problem and one that has attracted a lot of attention is the market for corporate control.Manne (1965)suggested that,if a publicly traded company is badly managed and the usual methods of corporate governance(board of directors,proxy bat-tles,etc.)are not effective in disciplining the management,a hostile takeover allows an outsider to acquire a controlling interest in thefirm,change the management,and realize an increase in shareholder value.Grossman and Hart(1980)provided a formal analysis of how the mar-ket for corporate control functions and pointed out the existence of a free-rider problem that may prevent takeovers from maximizing shareholder value. Here is a brief sketch of the model.The manager of afirm chooses an action a∈A and the resulting value of thefirm is denoted by V(a).Suppose the firm is under the control of an incumbent manager who for some reason(e.g., incompetence or private benefits)is not maximizing shareholder value.The optimal action is a∗but the manager chooses¯a.If a raider acquires control of thefirm and changes the action from¯a to a∗,social surplus increases by V(a∗)−V(¯a)and this gain in surplus can be shared between the raider andthe shareholders.A‘hold-out’problem arises because the existing shareholders anticipate12CHAPTER10.CORPORATE GOVERNANCE an increase in value if the raider successfully takes control of thefirm.The shareholders will be unwilling to tender their shares unless they are paid the full anticipated value.If takeovers are costly,the raider will undertake a takeover only if he anticipates a positive profit.But if the raider has to pay the full price he gets no profit from the takeover.To make this argument precise,consider the following game form:•The raider offers a price p for the shares of thefirm and pays afixed cost C>0(the cost of organizing the tender offer).•Each shareholder has a single share,which he can tender or retain.•If the raider acquires a fraction0<γ<1of the shares,he acquires control and can choose the action that maximizes the value of thefirm.If the fraction of shares tendered is less thanγ,the offer fails and the incumbent management is left in control.The equilibria of this game can be characterized by looking at these stages in reverse order.•At the last stage,if the raider has acquired a fraction g≥γof the shares,he gets control,chooses the optimal action a∗,and the value of thefirm is V(a∗).If he acquires a fraction g<γ,the incumbent manager remains in control,thefirm’s policy is unchanged,and the value of thefirm is V(¯a).•At the second stage,the shareholder receives the price p if he tenders his share.If he holds onto his share and the offer fails,his share is worth V(¯a).If he holds onto his share and the offer succeeds,his share is worth V(a∗).Thus,he will tender his share if p>V(¯a)(resp.p>V(a∗))and hold onto it if p<V(¯a)(resp.p<V(a∗)).•At thefirst stage,the raider must offer a price that equals the share-holders’reservation price to succeed.Thus,the offer can succeed only if p≥V(a∗).If the raider acquires a fraction g≥γof the shares,his profit is(p−V(a∗))g−C<0.10.1.THE MARKET FOR CORPORATE CONTROL3 So it appears that a takeover cannot succeed.Grossman and Hart suggest that dilution of the existing shareholders’property rights may provide the raider with sufficient profit to undertake the raid.Suppose that the dilution ratio isφ,that is,the raider can capture a fractionφof the minority shareholders’property rights by self-dealing,etc. Then the price offered must satisfy p≥(1−φ)V(a∗)and a successful tender offer is possible ifφV(a∗)≥C.Bagnoli and Lipman(1987)point out that the Grossman Hart model with a continuum of shareholders is special.Abstract:We noted at the outset that most of the literature ontakeovers assumes atomistic stockholders.As we pointed out,however,there are many largefirms for which this assumption isobviously inappropriate.This led us to consider thefinite stock-holder game.We showed that there are substantial differencesbetween thefinite game and the atomistic stockholder models.In particular,because some stockholders must be pivotal andhence cannot free ride,successful takeovers are possible withoutexclusion.Since the equilibrium outcome in thefinite stockholdergame is quite different from the atomistic stockholder outcome,the natural question to ask is under what conditions the atom-istic stockholder outcome obtains forfirms which are sufficientlywidely held.We showed that the atomistic stockholder outcomedoes not obtain in the infinite stockholder game.We also showedthat the difference between thefinite and atomistic stockholderoutcomes may not vanish in the limit.We argued that atom-istic stockholder models may provide a reasonable approximationto the outcome for takeovers with any-and-all bids if thefirm isnot sufficiently valuable relative to the dispersion of stock owner-ship.Otherwise,thefinite stockholder model is likely to providea more accurate prediction,so that exclusion is not necessary forsuccessful takeovers.Since,all else equal,stockholders generallybenefit more from takeovers without exclusion,our analysis sug-gests that stockholders would prefer to invest infirms which arevaluable relative to the dispersion of stock ownership.This,inturn,suggests that a givenfirm’s stock will not be“too”widely4CHAPTER10.CORPORATE GOVERNANCE held relative to its value.This seems like an interesting topic forfuture research.The essential idea is captured by the following game.Suppose there is a finite number of shareholders i=1,...,n and shareholder i holds a fraction θi of thefirm’s shares.The game is the same as above except that each shareholder i can tender a fraction t i≤θi of his shares and the raid succeeds if and only if X i t i≥γ.If the tender price is p the payoffto shareholder i isu i(p,t)=½(θi−t i)V(a∗)+t i p if P i t i≥γ(θi−t i)V(¯a)+t i p if P i t i<γ.Suppose that V(¯a)<p<V(a∗).Since we assume the offer succeeds if and only if P i t i≥γ,each shareholder will minimize his offer subject to this constraint.Any further reduction would cause the offer to fail and his payoffwould fall.For any p>V(¯a)it is optimal for agents to submit the maximumt i if the tender offer is expected to fail and the minimum consistent with P i t i≥γif it is expected to succeed.In a SPE the raider will offer p≤V(¯a) and the shareholders will choose to offer amounts t i such that P i t i≥γ.If p<V(¯a)there exists a trivial continuation equilibrium in which t i=0 for all i ifθi<γfor each i.The equilibrium constructed here depends crucially on the assumption that the fraction of the shares needed for control is known with certainty so that every shareholder is pivotal.Introducing a small amount of uncertainty could upset this equilibrium.Holmstrom and Nalebuff(1992)study mixed strategy equilibria of the finite game.Abstract:This paper reexamines Grossman and Hart’s(1980)in-sight into how the free-rider problem excludes an external raiderfrom capturing the increase in value it brings to afirm.Theinability of the raider to capture any of the surplus depends criti-cally on the assumption of equal and indivisible shareholdings—theone-share-per-shareholder model.In contrast,we show that onceshareholdings are large and potentially unequal,a raider may cap-ture a significant part of the increase in value.Specifically,the10.2.BENEFITS OF MANAGERIAL INDEPENDENCE5free-rider problem does not prevent the takeover process whenshareholdings are divisible.Grossman and Hart(1988)study the design of thefirm’s corporate charter to optimize the role of takeovers in maximizing the value of thefirm.There is a tradeoffbetween making thefirm too difficult to take over and thus protecting incumbent management and making it too easy and allowing the existing shareholders to be exploited in a corporate control contest.Abstract:This paper analyzes the optimality of the one share-onevote rule.The authors focus on takeover bids as a mechanism forallocating control.They assume two types of control benefits–benefits to security holders and private benefits to the controllingparty.One share-one vote maximizes the importance of benefitsto security holders,relative to benefits to the controlling party,and,hence,encourages the selection of an efficient managementteam.However,one share-one vote does not always maximize thereward to security holders in a corporate control contest.Suffi-cient conditions are given for one share-one vote to be optimaloverall.The paper also includes a discussion of the empiricalevidence.10.2Benefits of managerial independence The agency approach assumes that the manager is in control of thefirm, that his interests are opposed to the interests of the shareholders,and that the shareholders maximize their interess by exerting control over his actions. This is a useful complement to the traditional idea that managers maximize shareholders’preferences.How realistic is this view of the modern publicly traded company?In this section,we present a model of managerial indepen-dence and show that maximum control may not be optimal.We assume that the interests of managers and shareholders are imper-fectly aligned.Specifically,the manager has an incentive to overinvest.How-ever,the manager also has superior information about the efficient level of investment.The essential idea is that the shareholders may want to give the manager discretion in order to take advantage of his superior information, even if discretion is costly because it allows overinvestment.6CHAPTER10.CORPORATE GOVERNANCE The value of thefirm is assumed to be a functionv(x,θ)=(θ−x/2)x.of the amount invested x≥0and a random variableθ,uniformly distributed on an interval[0,M],which can be interpreted as the profitability of invest-ment.The manager’s preferences are represented by a utility functionu(x,θ)≡v(x,θ+a)=(θ+a−x/2)x,where a>0.A Pigovian tax t(x)=−ax achieves thefirst best.We assume that no such schemes are available.10.2.1Delegation without CommitmentDelegation without commitment is a special case of the“cheap talk”game introduced by Crawford and Sobel(1982).A strategy for the manager is a function f:[0,M]→[0,M]and the shareholders’strategy is a function g:[0,M]→R+.The shareholders beliefs are represented by a function µ:[0,M]→∆[0,M],where∆[0,M]denotes the set of probability distribu-tions on[0,M].Thenµ(m)is the shareholders’probability distribution over possible values ofθwhen the manager announces m.The equilibrium con-ditions require that each player is choosing a best response and that beliefs are consistent with Bayes’rule wherever possible.(i)g(m)∈arg max R M0(θ−x/2)xdµ(m);(ii)f(θ)∈arg max(θ+a−g(m)/2)g(m);(iii)µ(m)=unif f−1(m),for almost all m.If G is the range of the function g,then the manager is effectively choosing the level of investment from the set G and condition(ii)merely requires the manager to choose optimally from G for each value ofθ.The concavity of the manager’s objective function implies that the set f−1(x)is convex for every x∈G.Furthermore,the number of these sets must befinite,as the next lemma shows.Lemma1Suppose that x and x0belong to G and are chosen in equilibrium and x<x0.Then x+a<x0.10.2.BENEFITS OF MANAGERIAL INDEPENDENCE 7Without loss of generality,we can identify the manager’s strategy with a finite list of intervals {(θk ,θk +1)}K k =1,where θ1=0and θK +1=M,such that all manager types θ∈(θk ,θk +1)send the same signal,which causes shareholders to choose an investment level x k .Theorem 2Let {(θk ,x k )}K k =1be a sequence satisfying θ1=0and θk <θk +1and the following conditions:(i)x k =(θk +θk +1)/2,for k =1,...,K,where θK +1=M ;(ii)(θk +1+a )=(x k +x k +1)/2,for k =1,...,K −1.Then there exists a perfect Bayesian equilibrium (f,g,µ)such that (θk ,θk +1)⊂f −1(m k )and g (m k )=x k ,for k =1,...,K .Conversely,for any perfect Bayesian equilibrium (f,g,µ),there exists a sequence {(θk ,x k )}K k =1satisfying conditions (i)and (ii)and such that (θk ,θk +1)⊂f −1(m k )and g (m k )=x k ,for k =1,...,K10.2.2Delegation with CommitmentBy the revelation principle,we can restrict attention to direct revelation mechanisms.A direct revelation mechanism is a function g :[0,M ]→R +,where g (θ)is the investment speci fied by the shareholders when the manager reports his type to be θ.The manager will report his type truthfully if the mechanism is incentive-compatible and the optimal (incentive-compatible)mechanism maximizes the shareholders’payo ffE [(θ−g (θ)/2)g (θ)]subject to the incentive-compatibility constraint.As in the case without commitment,the manager is e ffectively choosing an element from the range of g ,G =g ([0,M ]).It will be convenient to use this representation of the mechanism in our analysis.To avoid pathological cases,we assume that G is a closed set.Lemma 3If g is an optimal,incentive-compatible mechanism,the graph G is an interval.Theorem 4If g ∗:[0,M ]→R +is an optimal incentive-compatible mech-anism for the shareholders,then for some value of x 1≤M ,the mechanism has the formg ∗(θ)=min {θ+a,x 1},∀θ∈[0,M ].8CHAPTER10.CORPORATE GOVERNANCE The optimal mechanism involves putting an upper bound x1on the amount of investment but apart from that the manager can choose the level of investment that he wants.Although there is some constraint on managerial discretion,it will be very small when M is large or a is small.In other words, when uncertainty is large and/or the divergence between the interests of the manager and shareholders not too great,the manager will be given almost complete discretion.One is led to speculate that if the support ofθwere un-bounded,the optimal mechanism could give managers complete discretion. In any case,this exercise indicates that there may be circumstances in which shareholders are best served by the separation of ownership and control,in spite of the existence of private benefits that distort the manager’s decision.10.2.3Burkart,Gromb and Panunzi(1997)This is a variant of solving the agency problem by“selling thefirm to the agent”.If the conflict of interest between shareholders and managers leads to inefficiency,reducing the claim of the shareholders may lead to greater ef-ficiency.Too much control by shareholders is not a good thing.The manager must have some discretion to pursue his own interests and reap private ben-efits;otherwise he will not have an incentive to make an effort on behalf of thefirm.The problem is that shareholders,once they start to micro-manage, cannot commit themselves to reward the manager in a way that is consistent with optimal incentives.So thefirm has to be constituted in a way that re-stricts shareholder power,in other words,commits them to leave some rents for the manager.Burkart,Gromb and Panunzi argue that ownership struc-ture can act as such a commitment device.By having dispersed ownership of outside equity,shareholders are effectively precommitting not to interfere with the managers.Each shareholder’s ownership will be sufficiently small that there will be little incentive to monitor.10.3CompetitionOver the last twenty years,the literature on corporate governance–or cor-poratefinance for that matter–has focused on the agency problems facing shareholders under separation of ownership and control.The assumption underlying this literature seems to be either thatPETITION9•government intervention is required to solve problems of corporate gov-ernance,or that•the US economy is underperforming because of the corporate gover-nance problems inherent in the separation of ownership and control of publicly traded companies compared with other systems.While it is possible to build theoretical models to substantiate these claims,the empirical evidence is less clear.There is,of course,anecdotal ev-idence of agency problems.But,the equity premium puzzle and the success of publicly traded companies in the US and UK,suggest that shareholders have done quite well by comparison with bondholders.An alternative approach is to focus not on the governance of individual firms but instead to focus on the effect of competition amongfirms.Corpo-rate governance can be regarded as a petition forcesfirms to adopt the most efficient technology.If a new technology arrives and is not adopted,it will be implemented by a competitor.Whatever inefficiencies exist at any date are to be regarded as the state of the art technology.It has been argued(see,e.g.,Alchian(1950)and Stigler(1958))that com-petition in product markets is a very powerful force for ensuring good corpo-rate governance.If the managers of afirm waste or consume large amounts of resources,thefirm will be unable to compete and will go bankrupt.There seems little doubt that competition,particularly international competition, is a powerful force in disciplining management.10.3.1Competition and managerial slackOne idea studied in the corporate governance literature is that competition between different organizational forms may be helpful in limiting efficiency losses.If a family-owned business has the sole objective of maximizing share value,it may force all the corporations in that industry to do the same thing. An early attempt to model product-market competition as a mechanism to discipline managers is found in Hart(1983).On the supply side,Hart assumes that there is a large number of smallfirms.A fractionνare traditional profit maximizers;these are called entrepreneurialfirms.The remaining fraction1−νare operated by managers who maximize their own interests;10CHAPTER10.CORPORATE GOVERNANCE these are called managerialfirms.Thefirms have identical cost functions C(w,q,L),where w is the input price,q is the output level,and L is the level of managerial effort.Managerial effort and input prices are assumed to be substitutes,in the sense that greater effort compensates for higher input costs:C(w,q,L)=ˆC(Φ(w,L),q).The cost indexΦ(w,L)is increasing in the input price w and decreasing in managerial effort L.Ex ante,the input prices are independently and identi-cally distributed acrossfirms.Ex post,there is no aggregate uncertainty:the cross-sectional distribution of input prices is non-stochastic and proportional to the ex ante probability distribution.The manager takes output and input prices as given and decides how much output to produce and how much managerial effort to exert in order to maximize his own preferences.An incentive problem arises because the manager can observe his input price w and his effort L,but the shareholders cannot.Thus,a manager who faces a low input price may choose to shirk: instead of achieving high profits for the shareholders he exerts a low level of effort and claims that profits are low because the input price is high.The manager’s preferences are assumed to be additively separable in in-come and effort:the von Neumann-Morgenstern utility function is H(U(I)−V(L)),where I is the manager’s income and L is his effort.The manager is infinitely risk averse:his utility-of-income function is veryflat above¯I and very steep below¯I.The manager’s reservation utility is¯U.In order to be acceptable to the manager,a managerial contract must guarantee the manager an income that is at least¯I and never call on the manager to make an effort greater than¯L,whereU(¯I)−V(¯L)=H−1(¯U).These restrictive assumptions are chosen to make the problem analytically tractable,but it turns out that they are crucial for the substantive results as well,as we shall see below.Since the manager must be paid afixed income and exert afixed amount of effort to achieve his reservation utility,this is the only outcome that is consistent with efficiency.If the shareholders could observe the manager’s effort L,they could achieve thefirst best by offering the manager a contract that pays him¯I as long as he exerts an effort L=¯L.Since they cannot do this,they must settle for the second best.It is assumed that the shareholdersPETITION11 know the distribution function F(w)and the equilibrium product price p andcan observe thefirm’s ex post profit level.Letπ(p,Φ)denote the maximumprofits when the product price is p and the cost index isΦ.If the managerfollows thefirst best rule of setting L=¯L,the profits vary between a low ofπ(p,Φ(w max,¯L))and a high ofπ(p,Φ(w min,¯L)).The manager must receive asalary of¯I(otherwise he gets less than his reservation utility¯U)and there isno point giving him more(since his utility function isflat above¯I).Thus,thebest that the owners can do is to offer him a salary of¯I as long as profits areequal toπ(p,Φ(w max,¯L))or greater.The managers will accept this contract,which requires them to workflat out(i.e.,choose L=¯L)when w=w max;butfor any lower price w<w max they can slack by taking less effort.Precisely,for any w<w max the manager chooses L(w)so thatπ(p,Φ(w,L(w)))=π(p,Φ(w max,¯L)).Under this contract,the equilibrium level of aggregate output will be strictlylower and the output price will be strictly higher than in thefirst best.This analysis assumes that the input prices for differentfirms are in-dependent,so the law of large numbers implies that there is no aggregateuncertainty.Suppose,on the other hand,that the input prices are perfectlycorrelated acrossfirms.Then the equilibrium product price is stochastic andpositively correlated with input prices.It is assumed that the shareholderscannot observe the equilibrium price or the profits of otherfirms in the in-dustry.As before,it is optimal for the shareholders to pick some input priceˆw and insist that the manager workflat out at that price.For any otherprice w=ˆw the manager will continue to produce the same profits,but willengage in some slack.The amount of managerial slack in an individualfirm is measured by theproportional increase in input prices that could be absorbed without anychange in profits if slack could be eliminated.The average amount of slack isdenoted by X ind in the market with independent input prices and X corr in themarket with perfectly correlated input prices.Given an equilibrium of thekind described above and some additional assumptions,it can be shown thatX corr≤X ind.In the independent case,the product price is constant across states of nature,because the cross-sectional distribution of input prices isnon-stochastic.When an individual manager faces an input price w<w max,he can reduce his effort because he only needs to produce profits greaterthan or equal toπ(p,Φ(w max,¯L)),the amount that he would produce by12CHAPTER10.CORPORATE GOVERNANCE workingflat out when the input price is w max.However,when input prices are perfectly correlated,there is a second effect to consider.Suppose thatˆp is the product price in the state with the input priceˆw.In a state of nature where w<ˆw,the output price p will be lower thanˆp.This is because all the entrepreneurialfirms also face a lower input price w<ˆw and are producing more output,thus pushing down the output price.The manager has to exert more effort to compensate for the fall in the output price,and this effect offsets his ability to slack as a result of the fall in input price.It can be shown that X ind is the same as the amount of slack that would be realized in a monopolisticfirm whose owners were faced by the same incentive problem in controlling the manager.In this sense,competition does not have an effect on managerial slack in the independent case.However,it can be shown that an increase in the fraction of entrepreneurialfirmsνdoes reduce X corr.The more entrepreneurialfirms there are in the market,the stronger the incentive effect of competition on managers will be.We remarked above that the simplifying assumptions about the man-agers’risk aversion turn out to be crucial for the substantive conclusions of Hart’s analysis.Scharfstein(1988)shows that the result that increased competition reduces managerial slack can be reversed when the manager’s marginal utility of income is strictly positive.Perhaps this should not be too surprising.Consider a different model,say a Cournot oligopoly model in which managerial effort is unobserved and the manager receives afixed share of profits.Greater competition(in the form of a larger number offirms in the market)will reduce profits and hence the managers’incentive to work.There is a trade-off,of course,between the interest of the shareholders in greater profits and the interest of consumers in getting more output at a lower price, so this is not to say that greater competition is a bad thing.Still,it suggests that the effects of competition will generally be ambiguous.The role of the market in Hart(1984)and Scharfstein(1988)is to provide information.If the owners could observe the profits of the entrepreneurial firms,they could use that information as a benchmark to condition the re-wards to the managers.This is the approach taken by Holmstrom(1982)and Nalebuffand Stiglitz(1983),for example.In Hart’s model this information is unavailable,so an indirect channel must be petition translates a fall in input prices into a fall in output prices,which in turn are translated into lower profits unless the managers work harder to keep profits up.In a recent study,Schmidt(1997)addresses a related question in a model without hidden information.Schmidt(1997)observes that increased compe-PETITION13 tition may threaten the survival of afirm by forcing it into bankruptcy and asks what effect this will have on managerial slack.Schmidt’s model assumes that the manager is risk neutral and wealth-constrained and that he suffers a penalty(lost rents,foregone opportunities)when thefirm goes bankrupt. The manager is required to engage in efforts that reduce future production costs.Costs are assumed to take on two values,high or low,and greater effort reduces the probability of high costs.The actual costs are observed after the manager has made the effort,and at that point the owner decides whether to liquidate thefirm or not.Greater competition lowers the price that thefirm receives for its output and,other things being equal,increases the risk that the owner willfind it optimal to liquidate thefirm.Schmidt discovers that greater competition has two effects on the man-ager’s optimal effort.Thefirst is the threat-of-liquidation effect that we ex-pect tofind:the manager has a directly increased incentive to work harder to avoid liquidation.There is also an indirect effect,since the cost to the owner of providing incentives to take high effort is reduced.So the threat-of-liquidation effect unambiguously raises managerial effort.The second effect is ambiguous and results from the fact that increased competition reduces profits and may reduce the benefits of a cost reduction. As a result,the owner may be disinclined to pay the manager the high rents necessary to achieve a cost reduction.If the value of a cost reduction is de-creasing in the degree of competition,the net effect of increased competition may be to lower managerial effort.The second effect occurs only if the manager is paid more than his reser-vation level.Schmidt(1997)cites a study by Aghion,Dewatripont,and Rey (1995)that treats a special case of his model.In their model,the manager is always paid his reservation level and so the effect of increased competition is unambiguous.These studies describe a mechanism by which competition in the product market helps discipline managers,but they are restrictive in several respects:•First,they all take the agency approach,in which the main obstacle to achieving efficiency is the principal-agent relationship between the manager and the shareholders.As we have indicated,some organiza-tions appear to function successfully even in the absence of external governance mechanisms.•Secondly,the focus of the models on cost minimization seems to be too narrow.While cost minimization may be a useful proxy for other。