Working Paper: NBER ID: w8177
Authors: Raghuram G. Rajan; Luigi Zingales
Abstract: Major technological, regulatory, and institutional changes have made finance more widely available in recent years, amounting to a bone fide 'financial revolution'. In this article, we focus on the impact the financial revolution has had on the way firms are (or should be) organized and managed, and on the policy consequences.
Keywords: Financial Revolution; Firm Organization; Power Dynamics; Governance; Resource Allocation
JEL Codes: G32; D23
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| financial revolution (G28) | dependence of firms on alienable assets (G32) |
| increased access to finance (O16) | control of owners over assets (G32) |
| financial revolution (G28) | shift in power dynamics within firms (L22) |
| human capital (J24) | power dynamics within firms (L22) |
| financial revolution (G28) | decoupling of growth opportunities from existing assets (D25) |
| firms respond to financial revolution (G20) | fostering complementarities between existing assets and new growth opportunities (O36) |
| governance structures must adapt (G38) | allocation of power and management of critical resources (H12) |