Short and long answer exam
Spend time explaining and less time writing out an argument
Law and contract act as though they are the invisible hand within the corporation
Shareholder theory eliminates the need of an invisible hand.
The BP oil spill reduced the regulatory effectiveness by throwing parties for the regulators.
The oil heads that they put on to save money would have been seen as morally correct for the
corporation for freeman.
There is a large difference between the small family owned business who should benefit from the
business. Whereas within major corporations the owners are not the original owners and take no
responsibility for the company.
Nexus of contract view - just a bunch of people making contracts
Arguing that the way in which the law organizes the firm to handle the way that everyone has
something at stake. Entity view of the firm that the company is a real thing and it is an autonomous
institution. That is by design in order to protect everyone from each other. Mediating hierarchy.
Managers are fiduciaries for the firm not investors
Everyone has a stake
Workers make firm specific investments of human capital over time a workers outside options dwindle
Another prisoners dilemma: training vs hard-working
Solution: pay younger employees less, older employees more
You get stuck with firm specific capital with aspirations of earning money later on. On