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Citations (13)



Identifying the Effect of Managerial Control on Firm Performance

Renee B. Adams

University of New South Wales; Financial Research Network (FIRN); European Corporate Governance Institute (ECGI)

João A. C. Santos

Federal Reserve Bank of New York

July 16, 2004

EFA 2002 Berlin Meetings Presented Paper

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.

Number of Pages in PDF File: 45

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

JEL Classification: G32, G30, G21

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Date posted: March 9, 2002  

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 http://dx.doi.org/10.2139/ssrn.301873

Contact Information

Renée B. Adams (Contact Author)
University of New South Wales ( email )
Sydney, NSW 2052
+61(2)93854280 (Phone)

Financial Research Network (FIRN)
C/- University of Queensland Business School
St Lucia, 4071 Brisbane
HOME PAGE: http://www.firn.org.au

European Corporate Governance Institute (ECGI)
B-1050 Brussels
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)
Feedback to SSRN

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References:  61
Citations:  13

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