The Trade-Off between Risk and Control in Corporate Ownership
AbstractThis paper analyses the risk-control trade-off in corporate ownership. It presents a simple model in which large shareholders decide their share depending on their risk aversion, risk-neutral effects attached to firm size, and the effectiveness of different (external and internal) mechanisms for controlling managers' behaviour. Two institutional settings in which the expected benefits from control appear to overcome risk aspects are explored: the U.S. at the turn of the twentieth century and Spain in the 1990s. The empirical evidence seems to support the predictions of the model regarding the relationship between ownership concentration, the characteristics of governance, and the size of the firm.
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Bibliographic InfoArticle provided by Mohr Siebeck, Tübingen in its journal Journal of Institutional and Theoretical Economics.
Volume (Year): 160 (2004)
Issue (Month): 2 (June)
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Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
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- D81 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Criteria for Decision-Making under Risk and Uncertainty
- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
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- Goergen, M. & Manjon, M.C. & Renneboog, L.D.R., 2004.
"Recent Developments in German Corporate Governance,"
2004-123, Tilburg University, Center for Economic Research.
- Goergen, Marc & Manjon, Miguel C. & Renneboog, Luc, 2008. "Recent developments in German corporate governance," International Review of Law and Economics, Elsevier, vol. 28(3), pages 175-193, September.
- Goergen, M. & Manjon, M.C. & Renneboog, L.D.R., 2004. "Recent Developments in German Corporate Governance," Discussion Paper 2004-014, Tilburg University, Tilburg Law and Economic Center.
- Manjon, M.C., 2004. "Econometric Modelling in Blockholder Systems of Corporate Governance," Discussion Paper 2004-74, Tilburg University, Center for Economic Research.
- Gursoy, Guner, 2009. "A strategic shift of automobile manufacturing firms in Turkey," MPRA Paper 20233, University Library of Munich, Germany.
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