The Trade-Off Between Risk and Control in Corporate Ownership
AbstractThis paper analyses the risk control trade o$ 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 rm size and the e$ectiveness of di$erent (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 USA at the turn of the 20th century and Spain in the 1990's. 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 InfoPaper provided by Tilburg University, Center for Economic Research in its series Discussion Paper with number 2003-81.
Date of creation: 2003
Date of revision:
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Web page: http://center.uvt.nl
Corporate Governance; Disciplinary Mechanisms; Large Shareholders;
Find related papers by JEL classification:
- C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Longitudinal Data; Spatial Time Series
- D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
- 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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- Gursoy, Guner, 2009. "A strategic shift of automobile manufacturing firms in Turkey," MPRA Paper 20233, University Library of Munich, Germany.
- Manjon, M.C., 2004. "Econometric Modelling in Blockholder Systems of Corporate Governance," Discussion Paper 2004-74, Tilburg University, Center for Economic Research.
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