Shareholders as Principals

This paper discusses experimental techniques for detecting if there are multiple sources in a duct and obtaining the acoustic characteristics of these sources. Experimental techniques for in-duct source characterization under plane wave conditions in ducts, when we know the location of the source, are well established. In some cases there can however be sources at both ends of a duct. The paper starts with discussing the possibility to, by using a number of flush mounted microphones in the duct, detect sources located on both sides of the test section and to extract the acoustic source characteristics of the sources. First the sound field in a duct with sources at both ends is discussed and described. The theory for experimental determination of source data is then described. A discussion of the consequences of source correlation is included. The methods are first tested using loudspeakers in a duct.QC 20120502</p

Multiple large shareholders, excess leverage and tunneling: evidence from an emerging market

The file attached to this record is the author's final peer reviewed version. The Publisher's final version can be found by following the DOI link.Manuscript Type: Empirical Research Question/Issue: Past empirical efforts in corporate governance have examined the effects of large shareholders with the excess control rights on tunneling activities. However, no study has systematically investigated the effects of multiple large shareholders on excess leverage policies and tunneling in an emerging country environment where minority rights protection is weak. In this study, we examine the role of multiple large shareholders and the effects of control contestability of multiple large shareholders on firm excess leverage decision and tunneling by controlling shareholders. Research Findings/Insights: Using a sample of 2,341 Chinese firms for the years 2001 to 2013, we document that the contestability of multiple non-controlling large shareholders relative to controlling shareholders reduces the adoption of excess leverage policies, tunneling and enhances capital investment. Another intriguing finding is that the government as a controlling shareholder exerts significant influence and reduces the monitoring effectiveness of multiple larger shareholders. Theoretical/Academic Implications: By addressing the role of multiple large shareholders on excess leverage decisions, this study makes an important contribution to the corporate governance literature. We extend the recent developments in agency theory regarding the role of multiple large shareholders in constraining expropriation of controlling shareholders with excess control rights and their effect on firm leverage decisions. Our results support the theoretical models which indicate that the presence of multiple large shareholders is an important and efficient internal governance mechanism that mitigates a firm’s agency costs, particularly, in an emerging market environment where corporate governance is weak and inadequate to curb tunneling problem. JEL classification: G15; G34; G3

Corporate governance and the protection of investors: A comparative and critical perspective on the legal responses to the ultimate concern and on potential developments

This paper, after reviewing the mechanisms for the direct and indirect protection of minority shareholders in the US, France, Germany and the UK, assesses these machanisms in light of a "subjective" aspect of minority shareholders protection (protection of weaker shareholders vs. stronger shareholders and/or management) and in light of an "objective" aspect of minority shareholders protection (conditions for the long-term success of the company) that can both be extrapolated from the OECD Principles. In this assessment, the paper, after evidencing the factors pushing towards formal convergence both within the EC and at the wider international level, and the need for functional convergence, calls into discussion the usefulness itself of international comparisons based on the formal rules in place in one jurisdiction commonly used as a yardstick, and suggests that a new minority shareholders protection index could be identified, taking into consideration both the subjective aspect and the objective aspect of investors protection

Managerial Entrenchment, Banker Distribution, and Corporate Governance: Evidence from Japan

This paper investigates whether managerial entrenchment of controlling shareholders affects the distribution of bankers to the boards of Japanese manufacturing firms. Bankers are not likely to be appointed to firms with large corporate shareholders as controlling shareholders because large corporate shareholders have incentives to entrench managers. Moreover, in the aftermath of executive appointments of banks and large corporate shareholders, restructuring and improved performances of the appointing firms are facilitated. The results suggest that managerial entrenchment of large corporate shareholders generates the substitution of role of corporate governance between banks and large corporate shareholders.Corporate governance; Managerial entrenchment; Controlling shareholders; Banks

Objectives of an Imperfectly Competitive Firm: A Surplus Approach.

We consider a firm acting strategically on behalf of its shareholders. The price normalization problem arising in general equilibrium models of imperfect competition can be overcome by using the concept of real wealth maximization. This concept is based on shareholders' aggregate demand and does not involve any utility comparisons. We explore the efficiency properties of real wealth maxima for the group of shareholders. A strategy is called S-efficient (S stands for shareholders) if there is no other strategy such that shareholders' new total demand can be redistributed in a way that all shareholders will be better off. Our main result states that the set of real wealth maximizing strategies coincides with the set of S-efficient strategies provided that shareholders' social surplus is concave. Thus, even if a firm does not know the preferences of its shareholders it can achieve S-efficiency by selecting a real wealth maximizing strategy.

A Little Birdie Said: How Twitter is Disrupting Shareholder Activism

Shareholders are organizing and mobilizing on new social media platforms like Twitter. This changes the dynamics of shareholder proxy contests in ways that favor shareholders over management. Disruptive technology may bring about a shareholder revolution, which may not be in shareholders’ best interests, at least from the perspective of shareholder wealth maximization, and it also has powerful implications for the future of corporate social responsibility

To sell or not to sell? Behavior of shareholders during price collapses

It is a common belief that the behavior of shareholders depends upon the direction of price fluctuations: if prices increase they buy, if prices decrease they sell. That belief, however, is more based on ``common sense'' than on facts. In this paper we present evidence for a specific class of shareholders which shows that the actual behavior of shareholders can be markedly different.Comment: 9 pages, 1 figure. To appear in International Journal of Modern Physics

Intraportfolio Litigation Essay

The modern trend is for investors to diversify. Shareholders who own one S&P 500 firm tend to own many of the others as well. This trend casts doubt on the traditional compensation and deterrence rationales for legal rules that hold corporations liable for the acts of their agents. Today, when A Corp sues B Corp (for breach of contract, theft of trade secrets, or any other legal wrong), many of the same shareholders own both the plaintiff and the defendant. For these shareholders, damages just shift money from one pocket to another, minus of course lawyer fees. We offer here a new rationale for corporate liability in such cases of “intraportfolio litigation.” Although corporae managers are typically rewarded for maximizing firm profits, what shareholders really care about is overall portfolio value. Firm-on-firm lawsuits can reduce principal-agent conflict by assigning intraportfolio costs to the managers responsible for them. Firm-specific financial data thus become a better tool for diversified shareholders to use in motivating and evaluating managers. Not all intraportfolio litigation can be justified on informational grounds, however. For example, securities fraud class actions against corporations lack informational value because the damages awards overstate the intraportfolio harm. Our theory thus provides lawmakers with a framework for distinguishing between value-creating and value-destroying lawsuits among diversified shareholders

The effect of corporate restructuring on the shareholders’ value: the case of GEC/Marconi

GEC/Marconi’s transformation from a diversified conglomerate to a focused telecommunications and information technology company was an eventful and rambling transmission that resulted in the deterioration of shareholders’ value. It represents one of the most dramatic falls from grace in British corporate history and one of the greatest corporate governance fiascos of all time. The study investigates the wealth effects of Marconi’s sell-offs and acquisitions on its shareholders’ value by calculating the abnormal returns on the announcement days of all the disposals/acquisition during 1996-2002. The results support the view that shareholders’ value increases when a company proceeds to corporate sell-offs to pursue a focus strategy. However, the authors conjecture that GEC/Marconi has destroyed shareholders’ value through these disposals/acquisitions because of several mistakes, such as being prone to heavy debt