Abstract

References (61)

Beta

Citations (9)

Beta

One-Click Download | Share | Email | Add to Briefcase

Identifying the Effect of Managerial Control on Firm Performance

Renee B. Adams
UQ Business School, University of Queensland; European Corporate Governance Institute (ECGI)

João A. C. Santos
Federal Reserve Bank of New York

July 16, 2004

EFA 2002 Berlin Meetings Presented Paper

Abstract:
We attempt to identify the consequence of the separation of inside ownership from control for firm performance. Exploiting the fact that banking institutions may hold their own shares in trust, we construct a clean measure of the wedge between inside voting control and cash flow rights. These shares provide managers with no monetary incentives, since the cash flows accrue to trust beneficiaries. However, managers may have the authority to vote these shares. Using a unique sample of data, we identify a pure effect of managerial voting control on firm performance. Contrary to the belief that managerial control is purely detrimental, we find that it has positive effects.

Keywords: Managerial control, Voting rights, Performance measurement, Trust investments

JEL Classifications: G32, G30, G21

Working Paper Series

Date posted: March 09, 2002 ; Last revised: August 04, 2004

Suggested Citation

Adams, Renee B. and Santos, João A. C., Identifying the Effect of Managerial Control on Firm Performance (July 16, 2004). EFA 2002 Berlin Meetings Presented Paper. Available at SSRN: http://ssrn.com/abstract=301873 or doi:10.2139/ssrn.301873

Export to: Export Citation What's this?

Contact Information

Renée B. Adams (Contact Author) UQ Business School, University of Queensland ( email ) Brisbane, QLD 4072 Australia +61 7 336 57285 (Phone) +61 7 3365 6988 (Fax)
European Corporate Governance Institute (ECGI) c/o ECARES ULB CP 114 B-1050 Brussels Belgium HOME PAGE: http://www.ecgi.org
João A.C. Santos Federal Reserve Bank of New York ( email ) 33 Liberty Street New York, NY 10045 United States 212-720-5583 (Phone) 212-720-8363 (Fax) HOME PAGE: HTTP://WWW.NEWYORKFED.ORG/RMAGHOME/ECONOMIST/SANTOS/CONTACT.HTML