Partnership Governance of Large Firms
Larry E. Ribstein (Deceased)
University of Illinois College of Law; PERC - Property and Environment Research Center
March 3, 2009
University of Chicago Law Review, Vol. 76, p. 289, 2009
Illinois Public Law Research Paper No. 08-37
U Illinois Law & Economics Research Paper No. LE09-015
This Article examines private-equity firms as an example of “uncorporate” structures in the governance of large firms. Other examples include master limited partnerships, real estate investment trusts, hedge funds, and venture capital funds. These firms can be seen as an alternative to the corporate form in dealing with the central problem of aligning managers’ and owners’ interests. In the standard corporate form, shareholders monitor powerful managers by voting on directors and corporate transactions, suing for breach of fiduciary duty, and selling control. These mechanisms deal with managerial agency costs by relying on other agents, including auditors, class action lawyers, judges, independent directors, and shareholder intermediaries such as mutual and pension funds. Uncorporations substitute other devices for corporate-type monitoring, including more closely tying managers’ economic wellbeing to the firm’s fortunes and greater assurance of distributions to owners. This Article also explores the implications of this analysis for the corporate tax, the enforcement of firms’ contractual arrangements, and the future of publicly held firms.
Number of Pages in PDF File: 23
JEL Classification: G3, G34, K0, K2, K20, L2, L20Accepted Paper Series
Date posted: May 29, 2009
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