A Paradox in Measuring Corporate Control

37 Pages Posted: 11 Sep 2000

See all articles by John E. Parsons

John E. Parsons

Massachusetts Institute of Technology (MIT) - Sloan School of Management

Christopher Maxwell

Charles River Associates

Daniel P. O'Brien

Compass Lexecon

Date Written: July 1999

Abstract

The Shapley value has been proposed as a measure of the control exercised by various shareholders of the firm. Measuring control is important in the analysis of competition in industries with significant cross ownership of shares. Unfortunately, we show that the Shapley value can generate paradoxical results when ownership interests in a corporation can be held indirectly through layered corporate entities. We illustrate the problem with a couple of simple examples based on patterns of corporate ownership in the cable industry where both layered corporate entitities and cross ownership are common.

Keywords: Corporate control, shapley value, cross ownership

JEL Classification: G3, D4

Suggested Citation

Parsons, John E. and Maxwell, Christopher and O'Brien, Daniel P., A Paradox in Measuring Corporate Control (July 1999). Available at SSRN: https://ssrn.com/abstract=234428 or http://dx.doi.org/10.2139/ssrn.234428

John E. Parsons (Contact Author)

Massachusetts Institute of Technology (MIT) - Sloan School of Management ( email )

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HOME PAGE: http://www.mit.edu/~jparsons/

Christopher Maxwell

Charles River Associates ( email )

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617-425-3330 (Phone)
617-425-3132 (Fax)

Daniel P. O'Brien

Compass Lexecon ( email )

555 12th Street NW
Washington, DC 20004
United States

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