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What is corporate governance?
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Key topics
 The big picture
 Stock price formation
 Fundamental value analysis
International corp. governance

Incentive mechanisms
 Decision system
Performance monitoring
 Incentive based compensation
 Bankruptcy system
 Ownership structure
 Creditor structure
 Capital structure
 Market for corporate control
Labor market competition
Product market competition

Related topics
Transaction cost economics
 Positive economics



Decision system

Introduction: The decision system is here defined as the system by which corporate decisions are distributed between the annual shareholder meeting, the board of directors and the management. It also covers issues in the corporate charter of relevance for the distribution of control, such as the existence of staggered boards and stocks with differential voting rights. Such decision systems are of major importance in corporate governance because their design affects the incentives of managers and thereby the economic efficiency of the firm. Classic references on decision systems are Fama and Jensen [1983a, 1983b].


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