This paper integrates elements from the theory of bureau. the theory of belongings rights and the theory of finance to develop a theory of the ownership construction of the house. We focus in this paper on the behavioural deductions of the belongings rights specified in the contracts between the proprietors and directors of the house. The possibility of supervising the behaviour of the company by agencies of reappraisal of controls has stayed aside in this analysis. In the activity they can utilize resources for altering the chance that the proprietor possesses to have the non monetary benefits. these activities consist of the budgetary limitations. audits. formal systems of control. creative activity of steps of compensation of inducements that serve to fall in the involvements of the director with those of the external stockholders.

In the illustrations it is possible to detect that a budgetary limitation derives in the possibilities of control this 1 has. the history besides shows that the different stockholders of the company can curtail the ingestion of the director to low measures of F ‘ . The value of the company is given by V = V – F ( M. a ) – M and the location of these points for the different degrees of M and for a given degree spreads in the AEC. The perpendicular inequality between the FV and curves ECB is M demoing the current value of market of the disbursals in the hereafter. The addition in the value of the signature that is joined is observed in the wealth of the proprietor. but his well being was lifting in less this. because he was halting having the non monetary benefits that before he was basking.

Fig. 3. The value of the house ( V ) and degree of non-pecuniary benefits ( F ) when outside equity is ( 1-? ) . U1. U2. U3 represent owner’s indifference curves between wealth and non-pecuniary benefits. and monitoring ( or adhering ) activities impose chance set BCE as the trade-off restraint confronting the proprietor. In the survey of the disbursals of brotherhood relevance does non hold the control of the disbursals. the proprietor take duty of the costs as a decrease in the wealth of the others. The proprietor can utilize resources to guarantee the external stockholders that it would restrict his activities. The disbursals costs of brotherhood are in usage as contractual warrants that have the books statements audited by a public history. the expressed entail against the abnormality on the portion of the director and contractual restrictions on the power of determination of the director.

The ideal graduated tables of the company are the activities of followup and entail. If we leave the external proprietors to make patterns of supervising to restrict the disbursals of the non monetary director and let that the decision maker should take portion in activities of bonds to guarantee a certain ingestion the proprietors of F making an enlargement. The brotherhood. the exterior action of monitoring and the inducements are for the degrees of these patterns with which it comes near to the optimisation. The company produces the last one of a manner to maximise his value. The difference between V * . it is the consequence of moving under nothing and costs of monitoring. The replies consist of the fact that the costs of bureau will be positive ever and when the costs of monitoring are positive. We define an bureau relationship as a contract under which one or more individuals ( the principal ( s ) ) engage another individual ( the agent ) to execute some service on their behalf. which involves deputing some decision-making authorization to the agent.

The size of the costs of bureau can alter depending the company. non ever it is the same thing. this depends on the penchants of the decision makers. the simpleness with which they can set up his ain penchants opposite to the maximization of the value in the gaining control of determinations and the costs of the activities of followup and entail. In the monopolistic competition and the managerial behaviour is observed that the competition of the markets in the merchandise limits itself to the behaviours of the executives and his manner of operating towards a maximization of the ideal value. The proprietors of a house with power of monopoly have the same inducements to restrict the differences of the director for the maximization of the value. as other proprietors of competitory companies.

The function of the limited duty it is said that is one of the most flamboyant qualities of the companies of form vis-a-vis person proprietors or companies. is the feature of the claims of duty limited in the capital of the companies ; without these points of importance all the investors in the purchase of actions of a joint-stock company it would be truly responsible with the whole weight of his personal heritage on the debts of the corporation. If the costs of bureau generated by the being of external proprietors are positive. that the absent proprietor ( the stockholders ) will pay to sell to another proprietor who can avoid these costs. With the proprietor – manager’s fiscal construction it will hold a strong inducement to take portion in the patterns of investing that promise large utility if it is done efficaciously. even if they have one really low chance of success.

If it goes out good. most of the net incomes is captured. if they go out severely the creditors support most of the costs. The publically held concern corporation is an amazing societal innovation. Millions of persons voluntarily entrust one million millions of dollars. francs. pesos. etc. of personal wealth to the attention of directors on the footing of a complex set of undertaking relationships. which delineate the rights of the parties involved. The growing in the usage of the corporate signifier every bit good as the growing in market value of established corporations suggests that at least. up to the present. creditors and investors have by and big non been disappointed with the consequences. despite the bureau costs inherent in the corporate signifier. Agency costs are every bit existent as any other costs. The degree of bureau costs depends. among other things. on statutory and common jurisprudence and human inventiveness in inventing contracts.