The Distribution of Power Among Corporate Managers, Shareholders, and Directors

Journal of Financial Economics (JFE), Vol. 20, pp. 3-24, 1988

Michael C. Jensen, A THEORY OF THE FIRM: GOVERNANCE, RESIDUAL CLAIMES AND ORGANIZATIONAL FORMS, Harvard University Press, December 2000

Harvard NOM Working Paper No. 00-09

27 Pages Posted: 11 Oct 2000 Last revised: 24 Feb 2012

Michael C. Jensen

SSRN; Harvard Business School; National Bureau of Economic Research (NBER); European Corporate Governance Institute (ECGI); Harvard University - Accounting & Control Unit

Jerold B. Warner

University of Rochester – Simon Business School

Date Written: June 1, 1988

Abstract

This article surveys the seventeen papers in this special issue of the Journal of Financial Economics, and related work. The major findings are: (1) patterns of stock ownership by insiders and outsiders can influence managerial behavior, corporate performance, and stockholder voting in election contests; (2) corporate leverage, inside stock ownership by managers, and the control market are interrelated; (3) departures from one share/one vote affect firm value and efficiency; (4) takeover resistance through defensive restructurings or poison pill provisions is associated with declines in share price; and (5) top management turnover is inversely related to share price performance.

Keywords: Agency Costs, Managerial Stock Ownership, Insiders, Outsiders, Control Market, Corporate Performance, One Share/One Vote, Restructuring, Poison Pill Provisions, Performance

Suggested Citation

Jensen, Michael C. and Warner, Jerold B., The Distribution of Power Among Corporate Managers, Shareholders, and Directors (June 1, 1988). Journal of Financial Economics (JFE), Vol. 20, pp. 3-24, 1988; Michael C. Jensen, A THEORY OF THE FIRM: GOVERNANCE, RESIDUAL CLAIMES AND ORGANIZATIONAL FORMS, Harvard University Press, December 2000; Harvard NOM Working Paper No. 00-09. Available at SSRN: https://ssrn.com/abstract=173459 or http://dx.doi.org/10.2139/ssrn.173459

Michael C. Jensen (Contact Author)

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Harvard Business School ( email )

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Harvard University - Accounting & Control Unit ( email )

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Jerold B. Warner

University of Rochester – Simon Business School ( email )

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