The separation of ownership and control has always been central in corporate governance debates. A large body of literature has sought to show that control-enhancing arrangements can deter investors. However, the experience of the last few years has suggested that companies with widely dispersed ownership can suffer from their own issues ? not least short-termism.
So, is ownership structure really the dividing line between ?good? and ?bad? governance that many commentators suggest? This short essay suggests that policymakers, academics and practitioners should be careful in deriving conclusions about the most effective ownership and control structures. Ownership is firm-specific and varies across life cycle stages, sectors, regions, countries and cultures. Ownership structures are also dynamic in that they (should) change over time according to evolving markets and shifting business strategies and practices.
Index funds own an increasingly large proportion of American public companies, currently more than one fifth and steadily growing. The stewardship decisions of index fund managers—how they monitor, vote, and engage with their portfolio companies...Read more
Using more than 50,000 firm-years from 1988 to 2015, we show that the empirical relation between a firm’s Tobin’s q and managerial ownership is systematically negative. When we restrict our sample to larger firms as in the prior literature, our...Read more
In a technology-driven, digital world, many of the largest and most successful businesses now operate as “platforms.” Such firms leverage networked technologies to facilitate economic exchange, transfer information, connect
This paper examines the effect of investor power in a model of staged equity financing. It shows how the usual effect where market power reduces valuations can be reversed in later rounds. Once they become insiders, powerful investors may use...Read more