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Agency Costs (agency + cost)
Selected AbstractsAGENCY COSTS OF THIRD-PARTY FINANCING AND THE EFFECTS OF REGULATORY CHANGE ON UTILITY COSTS AND FACTOR CHOICESANNALS OF PUBLIC AND COOPERATIVE ECONOMICS, Issue 4 2007Francis J. CRONIN ABSTRACT,:,Beginning in 1999, the Canadian Province of Ontario undertook restructuring and tried to implement performance based regulation for local electricity distribution utilities. Regulatory parameters were based on productivity research covering 1988,1997 that found little productivity difference by size, but wide variations in costs, factor mix, financing, and returns to capital among utilities. While some utilities questioned their ability to improve efficiency, other observers maintained many utilities were over-capitalized, especially from third-party financing paid by customers for connection/development charges; these observers noted that rates, profits, and valuations would be inflated. Despite its pervasive use, we can find no literature dealing with the implications of third-party funding. We assess the effects and adjustment dynamics of regulatory and financing changes on costs, factor mix, and performance. [source] The Impact of Managerial Entrenchment on Agency Costs: An Empirical Investigation Using UK Panel DataEUROPEAN FINANCIAL MANAGEMENT, Issue 3 2009Chrisostomos Florackis G3; G32 Abstract This paper empirically investigates the relationship between managerial entrenchment and agency costs for a large sample of UK firms over the period 1999,2005. To measure managerial entrenchment, we use detailed information on ownership and board structures and managerial compensation. We develop a managerial entrenchment index, which captures the extent to which managers have the ability and incentives to expropriate wealth from shareholders. Our findings, which are based on a dynamic panel data analysis, show that there is a strong negative relationship between managerial entrenchment and our inverse proxy for agency costs, namely asset turnover ratio. There is also evidence that short-term debt and dividend payments work as effective corporate governance devices for UK firms. Finally, our findings reveal that agency costs are persistent over time. The results are robust to a number of alternative specifications, including varying measures of managerial entrenchment and agency costs. [source] Agency Costs and Strategic Considerations behind Sell-offs: the UK EvidenceEUROPEAN FINANCIAL MANAGEMENT, Issue 3 2001Kevin M.J. Kaiser We analyse the impact of the motivation behind the sell-off and the use of the proceeds from the sale on the value of UK firms divesting assets during 1984,94. We find that managers do not create value when they divest assets in order to raise cash, in order to reshuffle assets without increasing corporate focus and when they do not announce the motivation behind the sale. In contrast, we find value increases for firms refocusing during the 1990s and for firms divesting loss-making assets. Returning the proceeds from the sale to shareholders or reducing leverage were also associated with value increases, whereas reinvesting the proceeds for growth had a negative impact during the 1980s, which disappeared in the 1990s, possibly as a result of the disciplinary role of the economic downturn on the investment behaviour of firms. [source] Monetary Policy, Agency Costs and Output DynamicsGERMAN ECONOMIC REVIEW, Issue 3 2003Ludger Linnemann Interest rate policy; financial accelerator; sticky prices and wages Abstract. This paper examines the role of financial market imperfections for output reactions to nominal interest rate shocks. Empirical evidence shows a hump-shaped impulse response function of output and suggests that credit supply co-moves with output. A monetary business cycle model with staggered price setting is presented where the firms' outlays for capital and labor must be covered by the sum of net worth of entrepreneurs and loans in the form of debt contracts. These properties are shown to generate a hump-shaped impulse response of output, which takes on the smooth and persistent appearance of the empirical output response when nominal wages are set in a staggered way, too. [source] Private Equity Syndication: Agency Costs, Reputation and CollaborationJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 5-6 2009Miguel Meuleman Abstract:, Syndicates are a form of inter-firm alliance in which two or more private equity firms invest together in an investee firm and share a joint pay-off, and are an enduring feature of the leveraged buyout (LBO) and private equity industry. This study examines the relationship between syndication and agency costs at the investor-investee level, and the extent to which the reputation and the network position of the lead investor mediate this relationship. We examine this relationship using a sample of 1,122 buyout investments by 80 private equity companies in the UK between 1993 and 2006. Our findings show that where agency costs are highest, and hence ex-post monitoring by the lead investor is more important, syndication is less likely to occur. The negative relationship between agency costs and syndication, however, is alleviated by the reputation and network position of the lead investor firm. [source] Waiving Technical Default: The Role of Agency Costs and Bank RegulationsJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 9-10 2006Hassan R. HassabElnaby Abstract:, This paper examines whether the characteristics of banks and borrowers are associated with banks' decisions to waive violations of debt covenants. The findings suggest that banks possess sufficient private information about firms, and they use this information in their waiver decisions. Banks' decisions to waive violations vary with the borrowers' agency costs, debt features, the banks' characteristics and regulatory circumstances, and the bank-firm business relationship. There is no evidence that syndicated loans, bank structure, and adverse economic conditions are significant determinants of the waiver decision. Research findings offer valuable insight into the theoretical and practical implications of debt covenants and agency costs. [source] Optimal Monetary Policy in a Model with Agency CostsJOURNAL OF MONEY, CREDIT AND BANKING, Issue 2010CHARLES T. CARLSTROM optimal monetary policy; agency costs This paper integrates a fully explicit model of agency costs into an otherwise standard Dynamic New Keynesian model in a particularly transparent way. A principal result is the characterization of agency costs as endogenous markup shocks in an output-gap version of the Phillips curve. The model's utility-based welfare criterion is derived explicitly and includes a measure of credit market tightness that we interpret as a risk premium. The paper also fully characterizes optimal monetary policy and provides conditions under which zero inflation is the optimal policy. Finally, optimal policy can be expressed as an inflation targeting criterion that (depending upon parameter values) can be either forward or backward looking. [source] Small Business Borrowing and the Owner,Manager Agency Costs: Evidence on Finnish DataJOURNAL OF SMALL BUSINESS MANAGEMENT, Issue 1 2010Mervi Niskanen This study investigates the impact that managerial ownership has on loan availability and credit terms. We find that managerial ownership is common in a sample of small and medium-sized Finnish firms. Our results suggest that an increase in managerial ownership decreases loan availability. The results on loan interest rates suggest that though an increase in managerial ownership initially increases interest rates, the effect is reversed at higher levels of ownership. Collateral requirements increase monotonically with managerial ownership. Overall, the results suggest that banks view that there are agency costs involved with managerial ownership even in small and medium-sized firms and that this is taken into account when lending to these firms. [source] Why Agency Costs Explain Diversification DiscountsREAL ESTATE ECONOMICS, Issue 1 2001Henrik Cronqvist We study diversificsation within the real estate industry because of its relative transparency: portfolio management of assets with well-defined market prices. Diversification is over property types and geographical regions. The major cause of the diversification discount is not diversification per se but anticipated costs due to rent dissipation in future diversifying acquisitions. Firms expected to pursue nonfocusing strategies do indeed diversify more, are valued ex ante at a 20% discount over firms anticipated to follow a focusing strategy, are predominantly privately controlled and use dual-class shares extensively. The ex ante diversification discount is, therefore, a measure of agency costs. [source] Dividends and Directors: Do Outsiders Reduce Agency Costs?BUSINESS AND SOCIETY REVIEW, Issue 2 2005SUSAN BELDEN First page of article [source] Residual income, non-earnings information, and information contentJOURNAL OF FORECASTING, Issue 6 2009Ruey S. Tsay Abstract We extend Ohlson's (1995) model and examine the relationship between returns and residual income that incorporate analysts' earnings forecasts and other non-earnings information variables in the balance sheet, namely default probability and agency cost of a debt covenant contract. We further divide the sample based on bankruptcy (agency) costs, earnings components and growth opportunities of a firm to explore how these factors affect the returns,residual income link. We find that the relative predictive ability for contemporaneous stock price by considering other earnings and non-earnings information is better than that of models without non-earnings information. If the bankruptcy (agency) cost of a firm is higher, its information role in the firm's equity valuation becomes more important and the accuracy of price prediction is therefore higher. As for non-earnings information, if bankruptcy (agency) cost is lower, the information role becomes more relevant, and the earnings response coefficient is hence higher. Moreover, the decomposition of unexpected residual income into permanent and transitory components induces more information than that of the unexpected residual income alone. The permanent component has a larger impact than the transitory component in explaining abnormal returns. The market and industry properties and growth opportunity also have incremental explanatory power in valuation. Copyright © 2008 John Wiley & Sons, Ltd. [source] A Comparison Between One-Tier and Two-Tier Board Structures in FranceJOURNAL OF INTERNATIONAL FINANCIAL MANAGEMENT & ACCOUNTING, Issue 3 2010Benedicte Millet-Reyes French companies operate in a unique environment characterized by the strong involvement of block shareholders such as families and banks. Furthermore, the French legal system allows firms to choose between a one-tier or a two-tier board structure. This study investigates whether this choice can affect the firm's operating and stock performance. Our regression results provide strong evidence that ownership and board structures are used together as corporate governance tools. In particular, the agency cost of debt is strongly affected by their interaction when institutional investors are also bank lenders. Our test results show that while family control has a negative impact on corporate governance, French institutional blockholders play a positive role as monitors of one-tier structures. In contrast, they are more likely to misuse the two-tier board system by promoting interlocked directorship, board opacity and their own interests as creditors. Our regression analysis reveals that foreign institutional investors do not have any impact on firm performance, regardless of board structure. Finally, we do not find any inverse relationship between board size and efficiency in France. [source] Corporate Value, Managerial Stockholdings and Investments of Japanese FirmsJOURNAL OF INTERNATIONAL FINANCIAL MANAGEMENT & ACCOUNTING, Issue 1 2006Carl R. Chen We use a simultaneous equation model which treats firm value, investments and management ownership as endogenous to the firm. Our results show a feedback relation between corporate value and management ownership, i.e., corporate value is positively impacted by management ownership, which in turn is positively impacted by corporate value. Corporate value also affects investments made by the firm. We also find that the effect of the main bank on corporate value is positive but only up to a certain point; then, it turns negative. Supporting the argument that keiretsu firms have lower agency cost, we find that firms belonging to a keiretsu have higher valuations during the sample period. Finally, we find that management ownership increases as the ownership of the main bank, ownership of institutional holders and cross-holdings decreases, suggesting a substitution effect among these monitoring forces. Our results indicate that ignoring the web of these relationships leads to incorrect inferences. [source] The Impact of R&D Intensity on Demand for Specialist Auditor Services,CONTEMPORARY ACCOUNTING RESEARCH, Issue 1 2005JAYNE M. GODFREY Abstract The audit fee research literature argues that auditors' costs of developing brand name reputations, including top-tier designation and recognition for industry specialization, are compensated through audit fee premiums. Audited firms reduce agency costs by engaging high-quality auditors who monitor the levels and reporting of discretionary expenditures and accruals. In this study we examine whether specialist auditor choice is associated with a particular discretionary expenditure - research and development (R&D). For a large sample of U.S. companies from a range of industries, we find strong evidence that R&D intensity is positively associated with firms' choices of auditors who specialize in auditing R&D contracts. Additionally, we find that R&D intensive firms tend to appoint top-tier auditors. We use simultaneous equations to control for interrelationships between dependent variables in addition to single-equation ordinary least squares (OLS) and logistic regression models. Our results are particularly strong in tests using samples of small firms whose auditor choice is not constrained by the need to appoint a top-tier auditor to ensure the auditor's financial independence from the client. [source] Private Predecision Information, Performance Measure Congruity, and the Value of Delegation,CONTEMPORARY ACCOUNTING RESEARCH, Issue 4 2000ROBERT M. BUSHMAN Abstract We use a linear contracting framework to study how the relation between performance measures used in an agent's incentive contract and the agent's private predecision information affects the value of delegating decision rights to the agent. The analysis relies on the idea that available performance measures are often imperfect representations of the economic consequences of managerial actions and decisions, and this, along with gaming possibilities provided to the agent by access to private predecision information, may overwhelm any benefits associated with delegation. Our analytical framework allows us to derive intuitive conditions under which delegation does and does not have value, and to provide new insights into the linkage between imperfections in performance measurement and agency costs. [source] Optimal Board Monitoring in Family-owned Companies: Evidence from AsiaCORPORATE GOVERNANCE, Issue 1 2010En-Te Chen ABSTRACT Manuscript Type: Empirical Research Question/Issue: We propose that high levels of monitoring are not always in the best interests of minority shareholders. In family-owned companies the optimal level of board monitoring required by minority shareholders is expected to be lower than that of other companies. This is because the relative benefits and costs of monitoring are different in family-owned companies. Research Findings/Insights: At moderate levels of board monitoring, we find concave relationships between board monitoring variables and firm performance for family-owned companies but not for other companies. The optimal level of board monitoring for our sample of Asian family-owned companies equates to board independence of 38 per cent, separation of the chairman and CEO positions, and establishment of audit and remuneration committees. Additional testing shows that the optimal level of board monitoring is sensitive to the magnitude of the agency conflict between the family group and minority shareholders and the presence of substitute monitoring. Theoretical/Academic Implications: This study shows that the effect of additional monitoring on agency costs and firm performance differs across firms with different ownership structures. Practitioner/Policy Implications: For policymakers, the results show that more monitoring is not always in the best interests of minority shareholders. Therefore, it may be inappropriate for regulators to advise all companies to follow the same set of corporate governance guidelines. However, our results also indicate that the board governance practices of family-owned companies are still well below the identified optimal levels. [source] Altruism and Agency in the Family Firm: Exploring the Role of Family, Kinship, and EthnicityENTREPRENEURSHIP THEORY AND PRACTICE, Issue 6 2006Neri Karra This article examines the relationship between altruism and agency costs in family business through an in-depth case study of a family firm. We found that altruism reduced agency costs in the early stages of the business, but that agency problems increased as the venture became larger and more established. Moreover, we suggest that altruistic behavior need not be confined to family and close kin, but may extend through networks of distant kin and ethnic ties. We thus present a more complex view of the agency relationship in family business than is often portrayed in the existing literature. [source] Entrepreneurial Management and Governance in Family Firms: An IntroductionENTREPRENEURSHIP THEORY AND PRACTICE, Issue 4 2004Lloyd P. Steier Many organizations, ranging from small entrepreneurial start-ups to large, multi-business and multi-national enterprises, exhibit a family dimension. Although there is much evidence that this familial dimension is pervasive in organizing economic activities, it remains understudied. The articles in this special issue further our understanding of family businesses and how they might be usefully managed and organized at operational and policy levels. They examine important topics,management succession, agency costs in family versus non-family firms, the effects of culture, and family elites in rent-seeking societies,and improve our understanding of the role of family in entrepreneurial wealth creation at both firm and societal levels. Importantly, these papers further our understanding of the contingencies and contexts wherein family based approaches to organizing enterprise might yield advantages or disadvantages. [source] The Impact of Managerial Entrenchment on Agency Costs: An Empirical Investigation Using UK Panel DataEUROPEAN FINANCIAL MANAGEMENT, Issue 3 2009Chrisostomos Florackis G3; G32 Abstract This paper empirically investigates the relationship between managerial entrenchment and agency costs for a large sample of UK firms over the period 1999,2005. To measure managerial entrenchment, we use detailed information on ownership and board structures and managerial compensation. We develop a managerial entrenchment index, which captures the extent to which managers have the ability and incentives to expropriate wealth from shareholders. Our findings, which are based on a dynamic panel data analysis, show that there is a strong negative relationship between managerial entrenchment and our inverse proxy for agency costs, namely asset turnover ratio. There is also evidence that short-term debt and dividend payments work as effective corporate governance devices for UK firms. Finally, our findings reveal that agency costs are persistent over time. The results are robust to a number of alternative specifications, including varying measures of managerial entrenchment and agency costs. [source] Payout Policy Pedagogy: What Matters and WhyEUROPEAN FINANCIAL MANAGEMENT, Issue 1 2007Harry DeAngelo G35; G32; H25 Abstract This paper argues that we should abandonMM (1961)irrelevance as the foundation for teaching payout policy, and instead emphasise the need to distribute the full value generated by investment policy (,full payout'). Because MM's assumptions restrict payouts to an optimum, their irrelevance theorem does not provide the appropriate prescription for managerial behaviour. A simple example clarifies why the correct prescription is ,full payout', and why both payout and investment policy matter even absent agency costs (DeAngelo and DeAngelo, 2006). A simple life-cycle generalisation explains the main stylised facts about the payout policies of US and European firms. [source] Share Repurchases, the Clustering Problem, and the Free Cash Flow HypothesisFINANCIAL MANAGEMENT, Issue 3 2009Chuan-San Wang We examine the market reaction to announcements of actual share repurchases, events that cluster both within and across firms. Using a multivariate regression model, we find that the market reacts positively to the events, indicating that these announcements provide additional information to that contained in the initial repurchase intention announcements. Further, the market response is especially favorable for firms with overinvestment problems as measured by Tobin's q, and is not related to signaling costs as measured by the size of the repurchase. Our findings generally support the hypothesis that share repurchases reduce the agency costs of excessive free cash flow. [source] Understanding the Endogeneity Between Firm Value and Shareholder RightsFINANCIAL MANAGEMENT, Issue 4 2005Jianxin (Daniel) Chi I explore the relation between firm value and the shareholder rights-based Governance Index "G," which has become a popular measure of governance quality among researchers and investors. I show that the relation is not spuriously driven by unobservable firm heterogeneity or an assortment of observable firm characteristics, such as firm growth potential and profitability. The causality seems to run from G to firm value, rather than from firm value to G. My results suggest that granting more rights to shareholders could be an effective way to reduce agency costs and enhance firm value. [source] A Monitoring Role for Deviations from Absolute Priority in Bankruptcy ResolutionFINANCIAL MARKETS, INSTITUTIONS & INSTRUMENTS, Issue 5 2003By Dina Naples Layish Firms that have successfully reorganized under Chapter 11 of the bankruptcy laws of the United States frequently award shares of common stock in the reorganized firm to pre-bankruptcy shareholders, even though pre-bankruptcy creditors' claims are not fully satisfied. Using a sample of large publicly traded firms, these deviations from absolute priority (DAPR) are found to be positively related to the severity of agency costs within a financially distressed firm. US bankruptcy laws may exacerbate these agency costs by granting exclusivity to management during the reorganization period. Firms in which outside shareholders are more concentrated have a lower occurrence of DAPR indicating that blockholders provide an effective monitoring mechanism for controlling managerial behavior during reorganization. On the other hand, firms without this monitoring mechanism have a higher probability of DAPR indicating that creditors attempt to control managerial behavior by providing them with some sort of financial compensation via their equity holding in the firm. Finally, the evidence indicates that DAPR can be used to mitigate the hold-up problem resulting from voting rights granted to both junior and senior claimants of the firm by US bankruptcy laws. [source] Agency problems and audit fees: further tests of the free cash flow hypothesisACCOUNTING & FINANCE, Issue 2 2010Paul A. Griffin G34; G35; M41; M42 Abstract This study finds that the agency problems of companies with high free cash flow (FCF) and low growth opportunities induce auditors of companies in the US to raise audit fees to compensate for the additional effort. We also find that high FCF companies with high growth prospects have higher audit fees. In both cases, higher debt levels moderate the increased fees, consistent with the role of debt as a monitoring mechanism. Other mechanisms to mitigate the agency costs of FCF such as dividend payout and share repurchase (not studied earlier) do not moderate the higher audit fees. [source] Investor Protections and Concentrated Ownership: Assessing Corporate Control Mechanisms in the NetherlandsGERMAN ECONOMIC REVIEW, Issue 2 2004Robert Chirinko Corporate governance; legal approach; the Netherlands Abstract. The Berle,Means problem , information and incentive asymmetries disrupting relations between knowledgeable managers and remote investors , has remained a durable issue engaging researchers since the 1930s. However, the Berle,Means paradigm , widely dispersed, helpless investors facing strong, entrenched managers , is under stress in the wake of the cross-country evidence presented by La Porta, Lopez-de-Silanes, Shleifer and Vishny, and their legal approach to corporate control. This paper continues to investigate the roles of investor protections and concentrated ownership by examining firm behaviour in the Netherlands. Our within-country analysis generates two key results. First, the role of investor protections emphasized in the legal approach is not sustained. Rather, firm performance is enhanced when the firm is freed of equity market constraints. Second, ownership concentration does not have a discernible impact on firm performance, which may reflect large shareholders' dual role in lowering the costs of managerial agency problems but raising the agency costs of expropriation. [source] Securities Laws, Disclosure, and National Capital Markets in the Age of Financial GlobalizationJOURNAL OF ACCOUNTING RESEARCH, Issue 2 2009RENÉ M. STULZ ABSTRACT As barriers to international investment fall and technology improves, the cost advantages for a firm's securities to trade publicly in the country in which that firm is located and for that country to have a market for publicly traded securities distinct from the capital markets of other countries will progressively disappear. Securities laws remain an important determinant of whether and where securities are issued, how they are valued, who owns them, and where they trade. I show that there is a demand from entrepreneurs for mechanisms that allow them to commit to credible disclosure because disclosure helps reduce agency costs. Under some circumstances, mandatory disclosure through securities laws can help satisfy that demand, but only provided investors or the state can act on the information disclosed and the laws cannot be weakened ex post too much through lobbying by corporate insiders. With financial globalization, national disclosure laws can have wide-ranging effects on a country's welfare, on firms and on investor portfolios, including the extent to which share holdings reveal a home bias. In equilibrium, if firms can choose the securities laws they are subject to when they go public, some firms will choose stronger securities laws than those of the country in which they are located and some firms will do the opposite. [source] Private Equity Syndication: Agency Costs, Reputation and CollaborationJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 5-6 2009Miguel Meuleman Abstract:, Syndicates are a form of inter-firm alliance in which two or more private equity firms invest together in an investee firm and share a joint pay-off, and are an enduring feature of the leveraged buyout (LBO) and private equity industry. This study examines the relationship between syndication and agency costs at the investor-investee level, and the extent to which the reputation and the network position of the lead investor mediate this relationship. We examine this relationship using a sample of 1,122 buyout investments by 80 private equity companies in the UK between 1993 and 2006. Our findings show that where agency costs are highest, and hence ex-post monitoring by the lead investor is more important, syndication is less likely to occur. The negative relationship between agency costs and syndication, however, is alleviated by the reputation and network position of the lead investor firm. [source] Waiving Technical Default: The Role of Agency Costs and Bank RegulationsJOURNAL OF BUSINESS FINANCE & ACCOUNTING, Issue 9-10 2006Hassan R. HassabElnaby Abstract:, This paper examines whether the characteristics of banks and borrowers are associated with banks' decisions to waive violations of debt covenants. The findings suggest that banks possess sufficient private information about firms, and they use this information in their waiver decisions. Banks' decisions to waive violations vary with the borrowers' agency costs, debt features, the banks' characteristics and regulatory circumstances, and the bank-firm business relationship. There is no evidence that syndicated loans, bank structure, and adverse economic conditions are significant determinants of the waiver decision. Research findings offer valuable insight into the theoretical and practical implications of debt covenants and agency costs. [source] WHAT DO ECONOMISTS TELL US ABOUT VENTURE CAPITAL CONTRACTS?JOURNAL OF ECONOMIC SURVEYS, Issue 1 2007Tereza Tykvová Abstract Venture capital markets are characterized by multiple incentive problems and asymmetric information. Entrepreneurs and venture capitalists enter into contracts that influence their behaviour and mitigate the agency costs. In particular, they select an appropriate kind and structure of financing and specify the rights as well as the duties of both parties. The typical features of venture capital investments are an intensive screening and evaluation process, active involvement of venture capitalists in their portfolio companies, staging of capital infusions, use of special financing instruments such as convertible debt or convertible preferred stock, syndication among venture capitalists or limited investment horizon. [source] Why aren't all Truck Drivers Owner-Operators?JOURNAL OF ECONOMICS & MANAGEMENT STRATEGY, Issue 1 2003Asset Ownership, the Employment Relation in Interstate for-hire Trucking Transaction-cost and agency theorists have frequently cited trucks as prototypical user-owned assets, and have consequently predicted a predominance of self-employed drivers who contract with motor carriers. In fact, owner-operators accounted for less than one-third of US trucking activity conducted by large interstate trucking firms in 1991, a proportion that has changed little since deregulation. Given the predictions of organizational economists, why is self-employment in the interstate trucking industry not the dominant organization form? We propose that transaction costs and agency costs are indeed important in the trucking industry. In the absence of externalities across hauls, contracting between carriers and owner-operators is preferred for traditional agency reasons. However, when the outcome of one haul imposes externalities on other hauls or on the carrier's reputation, an owner-operator will not internalize all costs associated with poor outcomes. Given problems of noncontractibility of maintenance effort, carrier ownership of the vehicle is the preferred organizational form in such a case. We also propose that vehicle idiosyncrasy can create thin market conditions that encourage carrier ownership of vehicles. A study of the organization and operations of 354 trucking firms for 1991 provides evidence consistent with these predictions. [source] | ||||||||||||||||||||||||||||