Some of the Causes and Consequences of Corporate Ownership Concentration in Canada

The June 1997 edition of Canadian Business ranks the top ten Canadian corporations in terms of growth. It states of its number-one performer, the Goldfarb Corporation, Goldfarb\u27s expansion strategy is founded on a few basic principles: First, look to invest in global companies.... Second, own more than 50% of the company in order to consolidate and control the business. Last, use Goldfarb\u27s own marketing expertise. It states of its number-three performer, on the other hand, Question: What turns a $395-million pipeline company into a$2.5 billion powerhouse in just three years? Answer: losing the majority shareholder. Ever since Olympia and York Developments Ltd. sold its 65% stake in IPL Energy Inc. of Calgary in 1992, IPL has grown with a vengeance. Instead of maximizing dividend payouts to satisfy cash-hungry O&Y, it has focused on expansion ( Performance 500, Top 10 1997, 137, 141; emphasis added). Mere pages apart, the magazine partially credits majority ownership with driving a successful company and blames majority ownership for restraining the performance of a potentially successful company. As this paper will discuss, there may be some truth to both opinions. At least since the time of Adam Smith, commentators have expressed concern about the effect of separating those who own a corporation from those who manage it, an effect resulting from the adoption of a widely held ownership structure (Smith 1937, 700; Berle and Means 1933). The suggested problem is that, if those who manage do not have a personal interest in the returns generated by the firm\u27s assets, those assets will be utilized in a way that may be beneficial to the manager but not to the owners. Berle and Means (1933), however, were more pessimistic, predicting not only that corporations not owned by their managers would underperform corporations owned by managers but also that these widely held corporations would eventually become the norm in developing industrial economies. The argument was simple. As an economy grows and firms strive for scale economies, entrepreneur-managers are not capable of raising money to finance the firm\u27s growth on their own and thus are compelled to go to equity markets to finance expansion. In repeatedly going to equity markets, of course, the entrepreneur eventually loses control of the firm. Because of the unceasing demand for capital in a rapidly industrializing society, the economy will in time largely comprise widely held corporations, which, given their inadequate governance by disinterested managers, does not bode well for the efficiency of the economy. It is apparent, however, that Berle and Means overstated the likelihood of an economy replete with widely held firms. While the widely held corporation is indeed the norm in the United States, firms controlled by very few shareholders remain predominant in other industrialized countries, such as Germany, Japan, and Canada. In Canada, for example, Morck and Stangeland (1994) report that just under 16 percent of the 550 largest corporations in Canada in 1989 were widely held in the sense that no single shareholder owned more than 20 percent of outstanding voting stock. Using the same definition, Demsetz and Lehn (1985) had found earlier that almost 50 percent of the largest 511 corporations in the United States were widely held. We first provide. a brief outline of the literature on corporate governance and ownership concentration. l Next, we examine legal issues that, as a positive matter, may have contributed to the concentrated ownership structure in Canada. We then examine the normative implications of these causal relations

Observation of hard scattering in photoproduction events with a large rapidity gap at HERA

Events with a large rapidity gap and total transverse energy greater than 5 GeV have been observed in quasi-real photoproduction at HERA with the ZEUS detector. The distribution of these events as a function of the $\gamma p$ centre of mass energy is consistent with diffractive scattering. For total transverse energies above 12 GeV, the hadronic final states show predominantly a two-jet structure with each jet having a transverse energy greater than 4 GeV. For the two-jet events, little energy flow is found outside the jets. This observation is consistent with the hard scattering of a quasi-real photon with a colourless object in the proton.Comment: 19 pages, latex, 4 figures appended as uuencoded fil

Measurement of Charged and Neutral Current e-p Deep Inelastic Scattering Cross Sections at High Q2

Deep inelastic e-p scattering has been studied in both the charged current (CC) and neutral current (NC) reactions at momentum transfers squared Q(2) above 400 GeV2 using the ZEUS detector at the HERA ep collider. The CC and NC total cross sections, the NC to CC cross section ratio, and the differential cross sections d sigma/dQ(2) are presented. From the Q(2) dependence of the CC cross section, the mass term in the CC propagator is determined to be M(W) = 76 +/- 16 +/- 13 GeV

Cases, Materials and Notes on Partnerships and Canadian Business Corporations, Fifth Edition

The 5th edition of Cases, Materials and Notes on Partnerships and Canadian Business Corporations remains the definitive source of the law relating to partnerships and corporations. This edition provides a comprehensive update (including commentary) of statutory and common law changes affecting corporate law, shareholder rights and remedies and director duties, including an in depth discussion of the Supreme Court\u27s decision in the People and BCE series of cases. The text has also been retooled to be more concise while maintaining the level of depth necessary to provide a thorough understanding of the relevant principles and issues in corporate law and the law of partnerships. Major issues covered include directors\u27 duties, the oppression remedy, shareholder activism.https://digitalcommons.osgoode.yorku.ca/faculty_books/1050/thumbnail.jp

Cases, Materials and Notes on Partnerships and Canadian Business Corporations, Fifth Edition

The 5th edition of Cases, Materials and Notes on Partnerships and Canadian Business Corporations remains the definitive source of the law relating to partnerships and corporations. This edition provides a comprehensive update (including commentary) of statutory and common law changes affecting corporate law, shareholder rights and remedies and director duties, including an in depth discussion of the Supreme Court\u27s decision in the People and BCE series of cases. The text has also been retooled to be more concise while maintaining the level of depth necessary to provide a thorough understanding of the relevant principles and issues in corporate law and the law of partnerships. Major issues covered include directors\u27 duties, the oppression remedy, shareholder activism.https://digitalcommons.osgoode.yorku.ca/faculty_books/1050/thumbnail.jp