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Large shareholders, monitoring, and the value of the firm

Burkart, Mike and Gromb, Denis and Panunzi, Fausto (1997) Large shareholders, monitoring, and the value of the firm. The Quarterly Journal of Economics, 112 (3). pp. 693-728. ISSN 0033-5533

Full text not available from this repository.
Identification Number: 10.1162/003355397555325

Abstract

We propose that dispersed outside ownership and the resulting managerial discretion come with costs but also with benefits. Even when tight control by shareholders is ex post efficient, it constitutes ex ante an expropriation threat that reduces managerial initiative and noncontractible investments. In addition, we show that equity implements state contingent control, a feature usually associated with debt. Finally, we demonstrate that monitoring, and hence ownership concentration, may conflict with performance-based incentive schemes.

Item Type: Article
Official URL: https://academic.oup.com/qje
Additional Information: © 1997 the President and Fellows of Harvard College and The Massachusetts Institute of Technology
Subjects: H Social Sciences > HG Finance
Sets: Departments > Finance
Date Deposited: 22 Feb 2017 10:47
Last Modified: 22 Feb 2017 10:47
URI: http://eprints.lse.ac.uk/id/eprint/69553

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