The separation of property and control and its costs a century old problem that seems modern

José G Vargas-Hernández,Yoeslandy García Marsilio

doi:10.12944/jbsfm.01.0102.02

José G Vargas-Hernández, Yoeslandy García Marsilio

Open Access

https://doi.org/10.12944/jbsfm.01.0102.02

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Abstract

The Agency Costs resulting from the conflict between principals and agents, due to the separation of ownership and control in the capitalist enterprise, was analyzed in many works of the last century. Could we assume that the current globalization of companies has increased the differences between principals and agents? Does this scenario lead to an increase in Agency Costs in those companies with the greatest presence in the global economy? The objective of this article is to compile studies that will allow us to answer these questions affirmatively and conclude that large transnational, multinational or global companies involve higher Agency Costs than those that remain within national borders.

Highlights

The twentieth century has gone down in history because of the great scientific discoveries, the two World Wars, the emergence and development of large companies and industries that spread throughout the world with the impetus of globalization, among other important events that carried out during those 100 years
All authors agree in some way that there is a close relationship between the growth of companies outside their borders and the agency costs they incur
The information gathered in this article allows to know a little more about the emergence and development of the theory of the agency, as a result of the separation of ownership and control, a gap that tends to increase when companies grow and internationalize

Summary

Introduction

The twentieth century has gone down in history because of the great scientific discoveries, the two World Wars, the emergence and development of large companies and industries that spread throughout the world with the impetus of globalization, among other important events that carried out during those 100 years. The challenges of globalization have led millions of companies to embark on the conquest of international markets, turning them into large multinationals and transnationals with a presence in most markets and a major role in global finance Before this event took unimaginable magnitudes and many authors were concerned and occupied the gap that opened between ownership and control or between principals and agents. Berle and Means.[1] In their book The Modern Corporation and Private Property, took on the task of identifying the problems caused by the separation of ownership and control, becoming pioneers in this research topic In their study they warn about the concentration of economic power caused by the increase of the big corporation and the emergence of a powerful class of professional managers, isolated from the pressure of the shareholders, and of the general public. This study was framed in North American companies and constituted a mandatory reference on the subject until the seventies

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