Set of Contracts Perspective

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Set of contracts perspective

View of corporation as a set of contracting relationships among individuals who have conflicting objectives, such as shareholders or managers. The corporation is a legal construct that serves as the nexus for the contracting relationships.

The belief that different stakeholders in the corporation have different interests that often, or always, conflict. For example, managers may be concerned about the company's ability to make a long-term profit while shareholders (especially traders) may consider primarily short term gains. Likewise, management may be interested in reducing expenses, while the union representing employees are most concerned with increasing members' wages and benefits.

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