Program Description: The modem corporation is one of the most successful inventions in history, as evidenced by its widespread adoption and survival as a primary vehicle of capitalism over the past century. However, we have only recently begun to understand the economic nature of the corporation. In recent years, the economic theory of the firm has advanced from a struggle with the identification of the economic conditions that lead to the formation of firms to a discourse on sophisticated issues concerning intrafirm relationships. As a consequence of these developments, economists have come to view the firm as a “nexus of contracts” among participants in the organization. When applied to the corporate form of organization, the theory of the firm is often referred to as the contractual theory of the corporation.
The LEC Workshop on the Contractual Theory of the Corporation began with an introduction to the Theory of the Firm and the Contractual Theory of publicly traded corporations and continue with discussions of jurisdictional competition and the genius of American corporate law, executive compensation and the market for corporate control, and insider trading. Workshop participants also attended a conference on the enduring legacy of the works of Henry G. Manne, includingMergers and the Market for Corporate Control, Insider Trading and the Stock Market, and Wall Street in Transition – The Emerging System and its Impact on the Economy.