Economics in Corporate Governance in Non-profit Maximising Firms

Abstract

It has been widely accepted that profit maximisation the cornerstone of economic analysis. The prevalence of non profit maximising firms such as cooperatives, partnership and the increasing importance in stakeholders' interest has raised my interest in this topic.

My thesis looks into the reasons that drive the prevalence of non-profit firms, such as the perception bias of managers, the special law and regulation in certain countries and the emphasis on the stakeholders' interests.

I base my analysis mainly on the oligopoly model and provided analysis on how the market is like in non-profit maximising environment compared to profit maximsing environment. I find out that non-profit firm is not necessary less profitable under certain circumstance. First chapter introduces the related literature; second chapter focuses on the influence of managers' perception bias on firms' decision; chapter three applied a two stage model to see how for-profit firms and non-profit firms react under uncertainty and last chapter focus on the governance of cooperative/partnership.