Corporate Ownership Structure and Top Executives’ Prosocial Preferences: The Role of Relational and External Blockholders

15 Pages Posted: 6 Nov 2015

See all articles by Hossam Zeitoun

Hossam Zeitoun

University of Warwick - Warwick Business School

Paolo Pamini

ETH Zurich

Date Written: November 2015


Manuscript Type. Empirical.

Research Question/Issue. The relationships between corporations and their stakeholders are often based on incomplete contracts, which are difficult to enforce in courts. Corporate managers play a key role in safeguarding incomplete contracts with stakeholders. This role requires a strong prosocial motivational orientation. Although the managers’ motivational orientation is invisible, stakeholders can make inferences about it from managers’ choices and behavior. Based on these ideas, this paper asks whether managers’ motivational orientations vary according to firms’ ownership structures, i.e., ownership by relational and external blockholders.

Research Findings/Insight. Results show that ownership by relational blockholders is associated with more prosocially oriented managers, whereas ownership by external blockholders is related to more self‐interested managers. This study adopts an unobtrusive measure to infer the managers’ motivational orientation. This measure reflects the managers’ willingness to pay taxes and can be assessed systematically in the Swiss empirical context. The results are corroborated using multivariate regression analysis and profile deviation analysis.

Theoretical/Academic Implications. This paper joins incomplete contract theory and behavioral economics to analyze how the shareholder primacy model and the stakeholder model fit with different types of managers. Based on the idea of profile deviation, we suggest that corporate ownership structure is an important factor influencing the degree to which firms approximate these two corporate governance models, and thereby their fit with the respective manager type.

Practitioner/Policy Implications. The theoretical arguments and the empirical evidence suggest that the fit between corporate ownership structure and managerial motivation merits consideration. When selecting managers, boards need to pay attention not only to their skills and competencies, but also to their motivational orientation in order to capitalize on the strengths of alternative corporate governance models.

Keywords: Corporate Governance, Ownership Structure, Prosocial Preferences, Stakeholders, Top Managers

Suggested Citation

Zeitoun, Hossam and Pamini, Paolo, Corporate Ownership Structure and Top Executives’ Prosocial Preferences: The Role of Relational and External Blockholders (November 2015). Corporate Governance: An International Review, Vol. 23, Issue 6, pp. 489-503, 2015, Available at SSRN: or

Hossam Zeitoun (Contact Author)

University of Warwick - Warwick Business School ( email )

Coventry CV4 7AL
United Kingdom

Paolo Pamini

ETH Zurich ( email )

ETH-Zentrum HG E62.2
Zurich, CH-8092
+41 44 632 7865 (Phone)


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