12 large corporation managerial capitalism and entity

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Large Corporation, Managerial Capitalism andEntity TheoryIn large measure the neoclassicaltheory perceived the enterpriseconsistently with theProprietorship Theory: most economists had theproprietary outlook, refusingde factothe institutional autonomy of theenterprise and, much more, the complexity and the sociality of itscorporate aim: in the marginal model the curve of utility of enterprisecoincides with the capitalist’s one.Regarding the conception of enterprise, theEntity Theorywas not in linewith the orthodox canons of the Economic Science.This diversity, anyway, does not reduce the significance of the linkbetween Accountancy and Economics, also because in the first ten yearsof the XX century, especially in the United States, were born heterodoxperspectives of study.Among all, from theEntity Theorypoint of view are relevant theManagerial Capitalismand theInstitutionalism.Between the end of the XIX and the beginning of the XX century thesocial and economic scene was deeply changing.As we have already pointed out, the new economic scenario wasdominated by the model of theLarge Corporation, directed byprofessional managers, who decided on behalf of a wide shareholding.Proprietorship is now definitely divided from managing, differently fromthe model of the economic subject traced in theneoclassical theory.The affirmation of aneconomic subject with wider boundaries and a newcomposition, found a new theoretical formalisation in theManagerialCapitalismand in its studies ondecisional processes of enterprisesdirected by managers, whose corporate aims were deeply different fromthose illustrated by the neo-classical microeconomics.Fundamental work is “Modern Corporation and Private Property” (Berleand Means 1932), in which, as Husband noted, there are many contactswith theEntity Theoryformalized by Paton in 192230.No doubt that the abandon of the proprietorship perspective in favour of adifferent perspective, directed to recognize the existence of an entityseparated from the proprietorship, appeared widely functional to theassumptions of the Managerial Capitalism.InAccounting Theory, for example, Paton pointed out that in LargeCorporation the line of distinction between ownership and debt is notalways clear. A similar conclusion is reached by Berle andMeans:30A. A. Berle, G.C. Means, The Modern Corporation and Private Property, McMillan,New York 1932.13
Thought the law still maintains the conception of a sharp dividing linerecognizing the bondholder as a lender of capital and the stockholder aquasi partner in the enterprise, economically the position of the two havedrawn together”.31TheneoclassicalPaton, in recognizing the existence of other curves ofutility which determine the objectives and the actions of enterprises, or atleast of some of them, in evidencing the difficulty of set the control andthe risk in one category of investors only, which is to say in proposing thetheory of the autonomous entity, goes near,anticipating them, tothe so

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Term
Fall
Professor
Claudia Müller
Tags
Economics, The American, Proprietorship theory

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