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Foundation Control and Investment Performance : Do intrinsic aspects of ownership and control matter?
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- Dzansi, James (author)
- Jönköping University,IHH, Centre for Family Entrepreneurship and Ownership (CeFEO),IHH, Economics, Finance and Statistics
- (creator_code:org_t)
- 2012
- 2012
- English.
- In: Global Economy & Finance Journal. - 1834-5883. ; 5:2, s. 58-78
- Journal article (peer-reviewed)
Abstract
Subject headings
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- This paper investigates the relevance of intrinsic motives in the value-enhancing monitoring role of large shareholders. A standard view in the corporate governance literature is that the large shareholder monitors management precisely because of personal financial interests. This paper argues that the exclusive focus on extrinsic considerations sidesteps the intrinsic motives of the large shareholder to minimize managerial opportunism and inefficiency. The paper sheds light on the importance of the intrinsic aspects of firm ownership and control by examining the relative investment performance of foundation controlled firms listed on the Stockholm Stock Exchange during 1999-2005. Foundations are not-for-profit organizations with no residual claimants and thus largely lack the personal financial motives to monitor management. The empirical analysis is carried out in the framework of the marginal q methodology. The results suggest that whereas the typical firm in the sample overinvests, the extent of overinvestment is significantly lower in firms with at least one large shareholder. More importantly, the results suggest that even though foundations largely lack the residual claimants and, hence, the personal financial interest, they are as efficient as other large shareholders in curbing managerial opportunism. This finding is consistent with the view that large shareholders are not only actuated by extrinsic motives to minimize managerial opportunism and inefficiency. Intrinsic motives matter.
Subject headings
- SAMHÄLLSVETENSKAP -- Ekonomi och näringsliv -- Nationalekonomi (hsv//swe)
- SOCIAL SCIENCES -- Economics and Business -- Economics (hsv//eng)
Keyword
- Large shareholders
- foundations
- non-personal wealth incentives
- social embeddedness
- investment performance
Publication and Content Type
- ref (subject category)
- art (subject category)
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