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The Profit-Performance Effects of the Separation of Ownership from Control in Large U.S. Industrial Corporations

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  • John Palmer

Abstract

After a survey of the empirical studies of Monsen, Chiu, and Cooley, of Kamerschen, and of Larner on the effects of the separation of ownership from control, this paper presents a study which shows that among firms with a high degree of monopoly power, management-controlled firms report significantly lower profit rates than owner-controlled firms. The works of Bain, Mann, and Shepherd and a 1967 FTC study supply information on barriers to entry, which more aptly capture the effect of separation of ownership and control. The findings confirm Hall and Weiss' conclusion that there is less variation in profit rates among large firms than among small ones.

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  • John Palmer, 1973. "The Profit-Performance Effects of the Separation of Ownership from Control in Large U.S. Industrial Corporations," Bell Journal of Economics, The RAND Corporation, vol. 4(1), pages 293-303, Spring.
    • Handle: RePEc:rje:bellje:v:4:y:1973:i:spring:p:293-303
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    Cited by:

    1. Andy Cosh & Paul Guest & Alan Hughes, 2007. "UK Corporate Governance and Takeover Performance," Working Papers wp357, Centre for Business Research, University of Cambridge.
    2. Vincent O. Ongore & Peter O. K'Obonyo, 2011. "Effects of Selected Corporate Governance Characteristics on Firm Performance: Empirical Evidence from Kenya," International Journal of Economics and Financial Issues, Econjournals, vol. 1(3), pages 99-122, September.
    3. Bøhren, Øyvind & Josefsen, Morten G., 2013. "Stakeholder rights and economic performance: The profitability of nonprofits," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4073-4086.
    4. Mark Roe, 2002. "Les rentes et leurs conséquences en matière de gouvernance des entreprises," Revue Finance Contrôle Stratégie, revues.org, vol. 5(1), pages 167-215, March.
    5. William P. Lloyd & John S. Jahera Jr. & Steven J. Goldstein, 1986. "The Relation Between Returns, Ownership Structure, And Market Value," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 9(2), pages 171-177, June.
    6. Khushboo Gulati & Seema Gupta & C. P. Gupta, 2020. "The Transformation of Governance System: A Decade Long Experience of Corporate Governance Using Meta-analysis," Global Journal of Flexible Systems Management, Springer;Global Institute of Flexible Systems Management, vol. 21(3), pages 233-262, September.
    7. James A. Verbrugge & Steven J. Goldstein, 1981. "Risk Return, And Managerial Objectives: Some Evidence From The Savings And Loan Industry," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 4(1), pages 45-58, March.
    8. Andy Cosh & Paul M. Guest & Alan Hughes, 2006. "Board Share‐Ownership and Takeover Performance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(3‐4), pages 459-510, April.
    9. MORIKAWA Masayuki, 2008. "Productivity and Survival of Family Firms in Japan: An Analysis Using Firm-Level Microdata," Discussion papers 08026, Research Institute of Economy, Trade and Industry (RIETI).

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