IDEAS home Printed from
   My bibliography  Save this paper

Ownership Concentration and the Theory of the Firm : A Simple-Game-Theoretic Approach to Applied US Corporations in the 1930's


  • Leech, Dennis


Capital market constraints on the firm are traditionally described as working through two mutually reinforcing mechanisms. Firct, a direct limitation on management discretion operates through accountability to shareholders. Larger shareholders are assumed continuously to monitor company performance particuarly in its effect on profitability and equity values. In the event of a departure from profit maximisation they will organise to use their voting power to force changes in company policy or, in the limit, to replace the existing top-level management with one more acceptable to them. Behind this institutional threat lies the second constraint, the possibility od an increase in share concentration leading to a takeover should the share prices fall low enough or the threat prove ineffective (for example if concentration is too low).

Suggested Citation

  • Leech, Dennis, 1985. "Ownership Concentration and the Theory of the Firm : A Simple-Game-Theoretic Approach to Applied US Corporations in the 1930's," The Warwick Economics Research Paper Series (TWERPS) 262, University of Warwick, Department of Economics.
  • Handle: RePEc:wrk:warwec:262

    Download full text from publisher

    File URL:
    Download Restriction: no

    References listed on IDEAS

    1. Svejnar, Jan, 1986. "Bargaining Power, Fear of Disagreement, and Wage Settlements: Theory and Evidence from U.S. Industry," Econometrica, Econometric Society, vol. 54(5), pages 1055-1078, September.
    2. Oswald, A. J., 1995. "Efficient contracts are on the labour demand curve: Theory and facts," Labour Economics, Elsevier, vol. 2(1), pages 102-102, March.
    3. Sampson, Anthony A, 1983. "Employment Policy in a Model with a Rational Trade Union," Economic Journal, Royal Economic Society, vol. 93(37), pages 297-311, June.
    4. Gylfason, Thorvaldur & Lindbeck, Assar, 1984. "Union Rivalry and Wages: An Oligopolistic Approach," Economica, London School of Economics and Political Science, vol. 51(202), pages 129-139, May.
    5. McDonald, Ian M & Solow, Robert M, 1981. "Wage Bargaining and Employment," American Economic Review, American Economic Association, vol. 71(5), pages 896-908, December.
    6. repec:fth:prinin:175 is not listed on IDEAS
    7. Oswald, Andrew J, 1982. "The Microeconomic Theory of the Trade Union," Economic Journal, Royal Economic Society, vol. 92(367), pages 576-595, September.
    8. Martin J. Osborne, 1984. "Capitalist-Worker Conflict and Involuntary Unemployment," Review of Economic Studies, Oxford University Press, vol. 51(1), pages 111-127.
    9. Andrew Oswald, 1984. "Efficient Contracts are on the Labour Demand Curve: Theory and Facts," Working Papers 555, Princeton University, Department of Economics, Industrial Relations Section..
    Full references (including those not matched with items on IDEAS)


    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.

    Cited by:

    1. Dennis Leech, 1988. "The Relationship Between Shareholding Concentration and Shareholder Voting Power in British Companies: A Study of the Application of Power Indices for Simple Games," Management Science, INFORMS, vol. 34(4), pages 509-527, April.

    More about this item


    Access and download statistics


    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:wrk:warwec:262. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Margaret Nash). General contact details of provider: .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.