So, Why Be Public?

Many observers have offered potential solutions. Some seek to address the issue of agency directly. Other prescriptions, including those embedded in the recently passed Sarbanes-Oxley bill, seek to increase transparency in financial reporting and strengthen the supervision of executives by boards. Although most of these provisions have merit, they raise more fundamental and often unasked questions: Can we solve the agency problem definitively and, if not, why do we remain so wedded to the form of the public corporation? In short: Why be public? And why, when we have witnessed so much innovation in business practice, has the corporate form itself been so static?

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