Peng_Chapter 16 - OWNERSHIP AND CONTROL concentrated...

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Unformatted text preview: OWNERSHIP AND CONTROL concentrated ownership and control - founders start up firms and completely own and control them on an individual or family basis diffused ownership - publicly traded corporations owned by numerous small shareholders but none with a dominant level of control separation of ownership and control - dispersal of ownership among many small shareholders, in which control is largely concentrated in the hands of salaried, professional managers who own little (or no) equity FAMILY OWNERSHIP family ownership and control may provide better incentives for the firm to focus on long-run performance may also minimize the conflicts between owners and professional managers may lead to the selection of less qualified managers (who happen to be the sons, daughters, and relatives of founders), the destruction of value because of family conflicts, and the expropriation of minority shareholders STATE OWNERSHIP in theory, all citizens (including employees) are owners, in practice, they have neither rights to enjoy dividends generated by SOEs (as shareholders would) nor rights to transfer or sell their property SOEs are de facto owned and controlled by government agencies far removed from ordinary citizens and employees there is little motivation for SOE managers and employees to improve performance, which they can hardly benefit from personally PRINCIPAL - AGENT CONFLICTS...
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Peng_Chapter 16 - OWNERSHIP AND CONTROL concentrated...

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