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Fausto Panunzi - One of the best experts on this subject based on the ideXlab platform.
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agency conflicts ownership concentration and legal shareholder protection
Journal of Financial Intermediation, 2006Co-Authors: Mike Burkart, Fausto PanunziAbstract:This paper analyzes the interaction between legal shareholder protection, managerial incentives, monitoring, and ownership concentration. Legal protection affects the expropriation of Shareholders and the blockholder's incentives to monitor. Because monitoring weakens managerial incentives, both effects jointly determine the relationship between legal protection and ownership concentration. When legal protection facilitates monitoring better laws strengthen the monitoring incentives, and ownership concentration and legal protection are inversely related. By contrast, when legal protection and monitoring are substitutes better laws weaken the monitoring incentives, and the relationship between legal protection and ownership concentration is non-monotone. This holds irrespective of whether or not the large shareholder can reap private benefits. Moreover, better legal protection may exacerbate rather than alleviate the conflict of interest between large and Small Shareholders.
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agency conflicts ownership concentration and legal shareholder protection
LSE Research Online Documents on Economics, 2001Co-Authors: Mike Burkart, Fausto PanunziAbstract:This paper analyses the interaction between legal shareholder protection, managerial incentives, and outside ownership concentration. Legal protection affects both the expropriation of Shareholders and the blockholders incentives to monitor. Because of this latter effect and its repercussion on managerial incentives, outside ownership concentration and legal shareholder protection can be both substitutes or complements. This holds irrespective of whether or not the large shareholder can reap private benefits. Moreover, better legal protection may exacerbate rather than alleviate the conflict of interest between large and Small Shareholders. In the extended framework with monetary incentives, ownership is fully dispersed when legal shareholder protection is strong. Otherwise, outside block ownership is optimal and is a substitute to legal protection when the law is of intermediate quality, while it is a complement when the law is poor.
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agency conflicts ownership concentration and legal shareholder protection
2001Co-Authors: Mike Burkart, Fausto PanunziAbstract:This Paper analyses the interaction between legal shareholder protection, managerial incentives, and ownership concentration. In our framework, blockholder and manager are distinct parties and the presence of a blockholder can both protect and hurt minority Shareholders. Legal shareholder protection affects both the expropriation of Shareholders and the blockholder's incentives to monitor. Because of this latter effect and its repercussion on managerial incentives, outside ownership concentration and legal shareholder protection can be both substitutes and complements. When legal protection and outside ownership concentration are substitutes, better legal protection may exacerbate rather than alleviate the conflict of interest between large and Small Shareholders. Moreover, strengthening legal minority shareholder protection may have adverse effects on the behaviour of the manager and of the large shareholder who both enhance share value. Hence, rules aimed at protecting minority Shareholders, e.g., equal treatment rules, can be detrimental.
Mike Burkart - One of the best experts on this subject based on the ideXlab platform.
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agency conflicts ownership concentration and legal shareholder protection
Journal of Financial Intermediation, 2006Co-Authors: Mike Burkart, Fausto PanunziAbstract:This paper analyzes the interaction between legal shareholder protection, managerial incentives, monitoring, and ownership concentration. Legal protection affects the expropriation of Shareholders and the blockholder's incentives to monitor. Because monitoring weakens managerial incentives, both effects jointly determine the relationship between legal protection and ownership concentration. When legal protection facilitates monitoring better laws strengthen the monitoring incentives, and ownership concentration and legal protection are inversely related. By contrast, when legal protection and monitoring are substitutes better laws weaken the monitoring incentives, and the relationship between legal protection and ownership concentration is non-monotone. This holds irrespective of whether or not the large shareholder can reap private benefits. Moreover, better legal protection may exacerbate rather than alleviate the conflict of interest between large and Small Shareholders.
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agency conflicts ownership concentration and legal shareholder protection
LSE Research Online Documents on Economics, 2001Co-Authors: Mike Burkart, Fausto PanunziAbstract:This paper analyses the interaction between legal shareholder protection, managerial incentives, and outside ownership concentration. Legal protection affects both the expropriation of Shareholders and the blockholders incentives to monitor. Because of this latter effect and its repercussion on managerial incentives, outside ownership concentration and legal shareholder protection can be both substitutes or complements. This holds irrespective of whether or not the large shareholder can reap private benefits. Moreover, better legal protection may exacerbate rather than alleviate the conflict of interest between large and Small Shareholders. In the extended framework with monetary incentives, ownership is fully dispersed when legal shareholder protection is strong. Otherwise, outside block ownership is optimal and is a substitute to legal protection when the law is of intermediate quality, while it is a complement when the law is poor.
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agency conflicts ownership concentration and legal shareholder protection
2001Co-Authors: Mike Burkart, Fausto PanunziAbstract:This Paper analyses the interaction between legal shareholder protection, managerial incentives, and ownership concentration. In our framework, blockholder and manager are distinct parties and the presence of a blockholder can both protect and hurt minority Shareholders. Legal shareholder protection affects both the expropriation of Shareholders and the blockholder's incentives to monitor. Because of this latter effect and its repercussion on managerial incentives, outside ownership concentration and legal shareholder protection can be both substitutes and complements. When legal protection and outside ownership concentration are substitutes, better legal protection may exacerbate rather than alleviate the conflict of interest between large and Small Shareholders. Moreover, strengthening legal minority shareholder protection may have adverse effects on the behaviour of the manager and of the large shareholder who both enhance share value. Hence, rules aimed at protecting minority Shareholders, e.g., equal treatment rules, can be detrimental.
Mariana Pargendler - One of the best experts on this subject based on the ideXlab platform.
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the evolution of shareholder voting rights separation of ownership and consumption
Yale Law Journal, 2013Co-Authors: Henry Hansmann, Mariana PargendlerAbstract:The nineteenth century saw the standardization and rapid spread of the modern business corporation around the world. Yet those early corporations differed from their contemporary counterparts in important ways. Most obviously, they commonly deviated from the one-share-one-vote rule that is customary today, instead adopting restricted voting schemes that favored Small over large Shareholders. In recent years, both legal scholars and economists have sought to explain these schemes as a rough form of investor protection, shielding Small Shareholders from exploitation by controlling Shareholders in an era when investor protection law was weak.We argue, in contrast, that restricted voting rules generally served not to protect Shareholders as investors, but to protect them as consumers. The firms adopting such rules were frequently local monopolies that provided vital infrastructural services such as transportation, banking, and insurance. The local merchants, farmers, and landholders who used these services were the firms’ principal Shareholders. They commonly purchased shares not in the expectation of profit, but to finance collective goods. Restricted shareholder voting assured that control of the firms’ services would not fall into the hands of monopolists or competitors. In effect, the corporations had much the character of consumer cooperatives. This perspective also sheds light on the unusual importance given to the doctrine of ultra vires in the nineteenth century.While current legal and economic scholarship has focused incessantly on the separation between ownership and control, the prior separation between ownership and consumption, accomplished by the late nineteenth century, was another fundamental but generally overlooked turning point in the history of the business corporation. Understanding this transformation throws light not just on historical practices, but also on contemporary debates over deviations from the rule of one-share-one-vote.
Andrei Simonov - One of the best experts on this subject based on the ideXlab platform.
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do Small Shareholders count
Journal of Financial Economics, 2011Co-Authors: Eugene Kandel, Massimo Massa, Andrei SimonovAbstract:Abstract We hypothesize that age similarity among Small Shareholders acts as an implicit coordinating device for their actions and, thus, could represent an indirect source of corporate governance in firms with dispersed ownership. We test this hypothesis on a sample of Swedish firms during the 1995–2000 period. Consistent with our hypothesis, we find that compared with Shareholders of differing ages, same-age noncontrolling Shareholders sell more aggressively following negative firm news; firms with more age-similar Small Shareholders are more profitable and command higher valuation; and an increase (decline) in a firm's Small shareholder age similarity brings a significantly large increase (decline) in its stock price. The last effects are more pronounced in the absence of a controlling shareholder.
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do Small Shareholders count
Social Science Research Network, 2010Co-Authors: Eugene Kandel, Massimo Massa, Andrei SimonovAbstract:We hypothesize that age similarity among Small Shareholders acts as an implicit coordinating device for their actions, and thus may represent an indirect source of corporate governance in firms with dispersed ownership. We test this hypothesis on a sample of Swedish firms during the 1995-2000 period. Consistent with our hypothesis, we find that compared to Shareholders of differing ages, same-age non-controlling Shareholders sell more aggressively following negative firm news; firms with more age-similar Small Shareholders are more profitable and command higher valuation; and an increase (decline) in a firm’s Small shareholder age-similarity brings a significantly large increase (decline) in its stock price. The latter effects are more pronounced in the absence of a controlling shareholder.
J I Yujun - One of the best experts on this subject based on the ideXlab platform.
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an analysis on the agency problem between controlling Shareholders and middle Small Shareholders based on enterprise ownership s perspective
East China Economic Management, 2007Co-Authors: J I YujunAbstract:The research on agency problem between controlling Shareholders and middle-Small shareholsers is increasingly emphasized by many scholars.Based on enterprise ownership's perspective,this paper analyses the agency problem between them from the separation of controlling rights and cash flow rights,and also demonstrates the reason why this kind of agency problem comes into being.And we also account for it further taking stock pyramids as an example.