Constraints on Large-Block Shareholders / Clifford G. Holderness, Dennis P. Sheehan.

Format:

Book

Author/Creator:

Holderness, Clifford G.

Contributor:

National Bureau of Economic Research.

Sheehan, Dennis P.

Series:

Working Paper Series (National Bureau of Economic Research) no. w6765.

NBER working paper series no. w6765

Language:

English

Subjects (All):

Corporate governance--Law and legislation.

Corporate governance.

Corporations--Investor relations.

Corporations.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1998.

Cambridge, Massachusetts : National Bureau of Economic Research, 1998.

Summary:

Corporate managers who own a majority of the common stock in their company or who represent another firm owning such an interest appear to be less constrained than managers of diffusely held firms, yet their power to harm minority shareholders must be circumscribed by some organizational or legal arrangements. Empirical investigations reveal that boards of directors in majority-owned firms are little different from firms with diffuse stock ownership. Another source of constraints on a majority shareholders -- capital market activity -- also appears to be no different from firms with diffuse ownership. Finally, there is little evidence that new organizational mechanisms have evolved to constrain managers who own large blocks of stock. The frequency and associated wealth effects of reorganizations of majority shareholder firms, however, indicate that the law constrains managerial majority shareholders, both in their day-to-day management and when they redeem the ownership interest of minority shareholders.

Notes:

Print version record

October 1998.