My Kingdom for a Horse: Resolving Conflicts of Interest in Asset Management

Racehorse trainers operate asset management businesses in which the assets owned by outside clients compete with those owned by managers for the latter's time care and attention. Although this potentially leads to serious conflicts of interest we find no evidence of an agency problem: in a sample of 8000 racehorses and their associated stables client-owned horses perform no worse than trainer-owned horses on average. However this outcome is not uniform across stables: the average performance advantage of client-owned horses over their trainer-owned counterparts is positive in big stables where client-owners provide much of the trainer's income but is negative in small stables with relatively few outside clients. Agents with more to lose apparently behave better

My Kingdom for a Horse: Resolving Conflicts of Interest in Asset Management

Racehorse trainers operate asset management businesses in which the assets owned by outside clients compete with those owned by managers for the latter's time care and attention. Although this potentially leads to serious conflicts of interest we find no evidence of an agency problem: in a sample of 8000 racehorses and their associated stables client-owned horses perform no worse than trainer-owned horses on average. However this outcome is not uniform across stables: the average performance advantage of client-owned horses over their trainer-owned counterparts is positive in big stables where client-owners provide much of the trainer's income but is negative in small stables with relatively few outside clients. Agents with more to lose apparently behave better

Technology and Contemporary Classical Music: Methodologies in Practice-Based Research

This position paper provides a distillation of the NCRM Innovation Forum, ‘Technology and Contemporary Classical Music: Methodologies in Creative Practice Research’, hosted by Cyborg Soloists in June 2023. It features contributions from a variety of creative practitioner-researchers to debate the current state and future of technologically focused, practice-based research in contemporary classical music. The position paper is purposefully polyphonic and pluralistic. By collating a range of perspectives, experiences and expertise, the paper seeks to provoke and delineate a space for further questioning, inquiry, and response. The paper will be of interest to those working within creative practice research, particularly in relation to music, music technologists and those interested in research methodologies more broadly

Technology and Contemporary Classical Music: Methodologies in Practice-Based Research

This position paper provides a distillation of the NCRM Innovation Forum, ‘Technology and Contemporary Classical Music: Methodologies in Creative Practice Research’, hosted by Cyborg Soloists in June 2023. It features contributions from a variety of creative practitioner-researchers to debate the current state and future of technologically focused, practice-based research in contemporary classical music. The position paper is purposefully polyphonic and pluralistic. By collating a range of perspectives, experiences and expertise, the paper seeks to provoke and delineate a space for further questioning, inquiry, and response. The paper will be of interest to those working within creative practice research, particularly in relation to music, music technologists and those interested in research methodologies more broadly

Inside ownership and performance: Evidence from the horse racing industry

Owners of assets (principals) have always faced the problem of entrusting their assets with other people (agents) who use these assets in some way other than what the principal desire, a phenomenon commonly known as the 'agency problem'. Research into the agency problem has sought to determine what motivates agents, and what can be done to minimise the divergence between the agent's actions and the principal's best interests. One area of such research investigates the what happens to firm performance when the agent/principal distinction is lessened by the agent acquiring some ownership stake in the asset. The predictions from theoretical research, and support from empirical research, into the relationship between inside ownership and performance varies significantly. The inconsistency between different empirical studies into the relationship between inside ownership and performance may be due to problems suffered by the corporate data used in these studies. This thesis investigates the inside ownership/performance relationship utilising non-corporate data, specifically horse racing data, in an attempt to avoid these problems. In general, the results from this thesis suggest that a negative relationship exists between trainer ownership and performance. These results support labour market discipline theories which predict that a negative relationship could exist between trainer ownership and performance.UnpublishedAlchian, Armen A, and Demsetz, Harold, 1972, Production, Information Costs, and Economic Organization, American Economic Review, 62, 777-795 Ang, James S, Cole, Rebel A, and Wuh, Lin James, 2000, Agency Costs and Ownership Structure, Journal of Finance 55, 81-106 Anton, Howard, 1988, Calculus with Analytic Geometry, John Wiley & Sons, Third Edition Barnard, C.I, 1962, The Functions of the Executive, Cambridge Barnhart, Scott W, and Rosenstein, Stuart, 1998, Board Composition, Managerial Ownership, and Firm Performance: An Empirical Analysis, The Financial Review 33, 1-16 Baumol, William J, 1959, Business Behaviour, Value and Growth, New York: Macmillan Becker, G.S, 1962, Competition, Monopoly, and the Pursuit of Pecuniary Gain: Comment, Aspects of Labor Economics, Princeton Benston, George J, 1985, The Validity of Profits-Structure Studies with Particular Reference to the FTC's Line of Business Data, The American Economic Review 75, 37-67 Berle, Adolf A. Jr., and Means, Gardner C, 1932, The modern corporation and private property (Macmillan, New York) Berman, Katrina V, and Berman, Matthew D, 1989, An Empirical Test of the Theory of the Labor-Managed Firm, Journal of Competition Economics 13, 281-300 Bhabra, Gurmeet Singh, and Maling, Hannah, 2000, Managerial Ownership and Firm Value: Evidence from New Zealand, Working Paper Bonin, John P, Jones, Derek C, and Putterman, Louis, 1993, Theoretical and Empirical Studies of Producer Cooperatives: Will Ever the Twain Meet, Journal of Economic Literature 31, 1290-1320 Boschen, John F, and Smith, Kimberly J, 1995, You Can Pay Me Now and You Can Pay Me Later: The Dynamic Response of Executive Compensation to Firm Performance, Journal of Business 68, 577-608 Chen, Carl R, and Steiner, Thomas L, 2000, Tobin's Q, Managerial Ownership, and Analyst Coverage, Journal of Economics and Business 52, 356-382 Chen, Kevin C.W, and Lee, C.W. Jevons, 2000, Accounting Measures of Business Performance and Tobin's q Theory, Journal of Accounting, Auditing & Finance 10, 587-609 Coase, R.H, 1937, The Nature of the Firm, Economica 4, 386-405 Cyert, Richard M, and March, James G, 1963, A Behavioural Theory of the Firm, Englewood Cliffs, N.J.: Prentice-Hall, 1963 Defourny, Jacques, 1992, Comparative Measures of Technical Efficiency for 500 French Workers' Cooperatives, Advances in the Economic Analysis of Participatory and Labor-Managed Firms 4, 27-62 Defourny, Jacques, Estrin, Saul, and Jones, Derek C, 1985, The Effects of Workers' Participation on Enterprise Performance, International Journal of Industrial Organisations 3, 197-217 Demsetz, Harold, and Lehn, Kenneth, 1985, The Structure of Corporate Ownership: Causes and Consequences, Journal of Political Economy 93, 1155-1177 Estrin, Saul, 1983, Self Management: Economic Theory and Yugoslav Practice, Cambridge, Cambridge University Press Estrin, Saul, Jones, Derek C, and Svejnar, Jan, 1987, The Productivity Effects of Worker Participation: Producer Cooperatives in Western Economics, Journal of Competitive Economics 11, 40-61 Fama, Eugene F, 1980, Agency Problems and the Theory of the Firm, Journal of Political Economy 88, No 2, 288-307 Gordon, R.A, 1961, Business Leadership in the Large Corporation, Berkeley Hansmann, Henry, 1990, The Viability of Worker Ownership: an Economic Perspective on the Political Structure of the Firm, The Firm as a Nexus of Treaties, London, Sage Publishing, 162-184 Hermalin, Benjamin E, and Weisbach, Michael S, 1991, The Effects of Board Composition and Direct Incentives on Firm Performance, Financial Management 20, 101-114 Himmelberg, Charles P, Hubbard, R. Glenn, and Palia, Darius, 1999, Understanding the determinants of managerial ownership and the link between ownership and performance, Journal of Financial Economics 53, 353-384 Hirsch, Barry T, and Seaks, Terry G, 1993, Functional Formin Regression Models of Tobin's q, The Review of Economics and Statistics 75, 381-385 Horvat, Branko, 1982, The Political Economy of Socialism, Armonk NY, M.E. Sharpe Jensen, Michael C, and Meckling, William H, 1976, Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure, Journal of Financial Economics 3, 305-360 Jensen, Michael C, Meckling, William H, 1979, Rights and Production Functions: An Application too Labor- Managed Firms and Codetermination, Journal of Business 52, 469-506 Jensen, Michael C, and Murphy, Kevin J, 1990b, Performance Pay and Top-Management Incentives, Journal of Political Economy 98, 225-264 Jones, Derek C, and Backus, David K, 1977, British Producer Cooperatives in the Footwear Industry: An Empirical Test of the Theory of Financing, Economic Journal 87, 488-510 Jones, Derek C, and Svejnar, Jan, 1985, Participation, Profit Sharing, Worker Ownership and Efficiency in Italian Producer Cooperatives, Economica 55, 449-465 Kaysen, K, 1960, The Corporation: How Much Power? What Scope? The Corporation in Modern Society, ED E.S. Mason Kempthorne, Oscar, 1952, The Design and Analysis of Experiments, John Wiley & Sons, Inc, Canada Kole, Stacey R, 1995, Measuring Managerial Equity Ownership: a Comparison of Sources of Ownership Data, Journal of Corporate Finance 1, 413 - 435 Lee, Barbara, 1988, Productivity and Employee Ownership: The Case of Sweden, Stockholm, Sweden: Trade Union Institute for Economic Research Lee, Darrell E, and Tompkins, James G, 1999, A modified version of the Lewellen and Badrinath measure of Tobin's Q, Financial Management 28, 20-31 Leibenstein, Harvey, 1966, Allocative Efficiency Vs. "X-Efficiency", American Economic Review 61, 392-415 Lewellen, W, 1969, Management and Ownership in the Large Firm, Journal of Finance 24, 299-322 Lewellen., Wilbur G, and Badrinath, S.G, 1997, On the Measurement of Tobin's q, Journal of Financial Economics 44, 77-122 Lindenber, Eric B, and Ross, Stephen A, 1981, Tobin's q Ratio and industrial Organization, Journal of Business 54,1-32 Loderer, Claudio, and Martin, Kenneth, 1997, Executive stock ownership and performance: Tracking faint traces, Journal of Financial Economics 45, 223-255 McConnell, John J, and. Servaes, Henri, 1990, Additional Evidence on Equity Ownership and Corporate Value, Journal of Financial Economics 27, 595-612 Manly, Bryan F.J, 1992, The design and analysis of research studies, Press Syndicate of the University of Cambridge, Cambridge Monsen, R. Joseph, and Downs, Anthony, 1965, A Theory of Lar ge Managerial Firms, The Journ aolf Political Economy, 221-236 Morck, Randall, Shleifer, Andrei, and Vishny, Robert W, 1988, Management Ownership and Market Valuation, Journal of Financial Economics 20, 293-315 Reder, M.W, 1947, A Reconsideration of the Marginal Productivity Theory, Journal of Political Economy 55, 450-458 Reekie, W. Duncan, 1975, Managerial Economics, Camelot Press Limited, Philip Allan Publishers, Oxford Shepherd, William G, 1986, Tobin's q and the Structure-Performance Relationship: Reply, The American Economic Review 76, 1205-1210 Short, Helen, and Keasey, Kevin, 1999, Managerial Ownership and the Performance of Firms: Evidence from the UK, Journal of Corporate Finance 5, 79-101 Simon, Herbert, 1961, Administrative Behaviour, New York Smirlock, Michael, Gilligan, Thomas, and Marshall, William, 1984, Tobin's q and the Structure-Performance Relationship, American Economic Review, 1051-1060 Smith, Adam, 1776, The Wealth of Nations, Cannan Edition, Fifth Edition, 1930, Methuen & Co. LTD London Steiner, Thomas Lorenz, 1996, A Reexamination of the relationships between ownership structure, firm diversification and Tobins Q, Journal of Business and Economics 35, 39-48 Stutz, Rene M, 1998, Managerial Control of Voting Rights, Journal of Financial Economics 20, 25-54 Weitzman, Martin L, and Kruse, Douglas L, 1990, Profit Sharing and Productivity, Paying for Productivity: A Look at the Evidence, Washington DC, Brookings Institution, 95-141 Wernerfelt, Birger, and Montgomery, Cynthia A, 1988, Tobin's q and the Importance of Focus in Finn Performance, The American Economic Review 78, 246-250 Williamson, Oliver E, 1964, The Economics of Discretionary Behavior: Managerial Objectives in a Theory of the Firm Englewood Cliffs, N.J.: Prentice-Hall Williamson, Oliver E, 1980, The Organisation of Work: A Comparative Institutional Assessment, Journal of Economic Behavior Organisations 1, 5-8 Related Works Alchian, Armen A, and Kessel, Reuben A, 1962, Competition, Monopoly, and the Pursuit of Money, Aspects of Labor Economics, National Bureau of Economic Research, Princeton University Press, Princeton, N.J. 157-183 Attaway, Morris C, 2000, A Study of the relationship between company performance and CEO compensation, American Business Review18, 77-85 Bamberg, G, and Spremann, K, 1987, Agency Theory, Information, and Incentives, Springer-Varlag, Berlin Beedles, William L, 1977, A Micro-Economic Investigation of Multi-Objective Firms, The Journal of Finance 32, 1217-1233 Bothwell, James L, 1980, Profitability, Risk and the Separation of Ownership from Control, The Journal of Industrial Economics 28, 303-311 Boudreaux, Kenneth J, 1973, `Managerialism' and Risk Return Performance, Southern Economic Journal 39, 366-372 Bower, Richard S, 1969, Discussion, The Journal of Finance 24, 339-341 Cohen., Kalman J, and Cyert, Richard M, 1965, Theory of the Firm: Resource Allocation in a Market Economy, Prentice Hall Inc, Englewood Cliffs, New Jersey Copeland, Thomas E, and Weston, J. Fred, 1992, Financial Theory and Corporate Policy, Addison-Wesley Crutchley, Claire E, and Hansen, Robert S, 1989, A Test of the Agency Theory of Managerial Ownership, Corporate Leverage, and Corporate Dividends, Financial Management 18, 37-46 Demsetz, Harold, 1983, The Structure of Ownership and the Theory of the Firm, Journal of Law &Economics 26, 378-390 Dong, Xiao-yuan, and Dow, Gregory K, 1993, Monitoring Costs in Chinese Agricultural Teams, Journal of Political Economy 101, 539-553 Draper, N.R, and Smith, H, 1966, Applied Regression Analysis, John Wiley and Sons, New York Easterbrook, F, 1984, Two Agency-Cost Explanations of Dividends, American Economic Review 74, 650-659 Edwards, Franklin R, 1977, Managerial Objectives in Regulated Industries: Expense-Preference Behaviour in Banking, Journal of Political Economy 85, 147-162 Ehrenberg, Ronald G, and Boganno, Michael L, 1990, The Incentive Effects Of Tournaments Revisited: Evidence from the European PGA Tour, Industrial and Labor Relations Review 43 Special Issue, 74 S- 88 S Fama, Eugene F, and French, Kenneth R, 1993, Common Risk Factors in the Returns on Stocks and Bonds, Journal of Financial Economics 33, 3-57 Fama, Eugene F, and Jensen, Michael C, 1983, Separation of Ownership and Control, Journal of Law & Economics 26, 301-325 Fama, Eugene F, and Jensen, Michael C, 1983, Agency Problems and Residual Claims, Journal of Law & Economics 26, 327-349 Fatemi, Ali M, Ang, James S, and Chua, Jess H, 1983, Evidence Supporting Shareholder Wealth Maximization in Management Controlled Firms, Applied Economics 15, 49-60 Fisher, Franklin M, and McGowan, John J, 1983, On the Misuse of Accounting Rates of Return to Infer Monopoly Profits, The American Economic Review 73, 82-97 Goergen, Marc, 1998, Corporate Governance and Financial Performance: A Study of German and UK Initial Public Offerings, Edward Eiger, Cheltenham, UK. Gordon, RA, 1938, Ownership by Management and Control Groups in the Large Corporation, Quarterly Journal of Economics 52, 637-379 Grabowski, Henry G, and Mueller, Dennis C, 1972, Managerial and Stockholder Welfare Models of Firm Expenditures, Review of Economics and Statistics 54, 9-24 Hart, 0.D, 1983, The market mechanism as an incentive scheme, Bell Journal of Economics 14, 366-382 Holl, Peter, 1975, Effect of Control Type on the Performance of the Firm in the U.K., The Journal of Industrial Economics 23, 257-269 Holstrom, Bengt, 1979, Moral Hazard and Observability, Bell Journal of Economics 10, 74-91 Jensen, Michael C., 1986, Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers, American Economic Review (AEA) 76, 323-329 Jensen, Michael C, and Murphy, Kevin J, 1990a, CEO Incentives - It's Not How Much you Pay, But How, Harvard Business Review, May-June, 138-153 Jensen, Michael C, and Ruback, R, 1983, The Market for Corporate Control: The Scientific Evidence, Journal of Financial Economics 11, 5-50 Jones, Derek C, 1982, British Producer Cooperatives, 1948-1968: Productivity and Organisational Structures, Participatory and Self Managed Firms: Evaluating Economic Performance, Lexington, Lexington Books, 175- 1.98 Kamerschen, David R, 1968, The Influence of Ownership and Control on Profit Rates, American Economic Review 58, 432-447 Larner, Robert J, 1966, Ownership and Control in the 200 Largest Nonfinancial Corporations, 1929 and 1963, American Economic Review 56, 777-787 Larner, Robert J,1970, Management Control and the Large Corporation, Dunellen, New York Machlup, Fritz, 1967, Theories of the Firm: Marginalist, Behavioural, Managerial, The American Economic Review, 1-33 MacMinn, Richard D, 1984, Notes of Jensen and Meckling's "Theory of the Firm: Managerial Behaviour Agency Costs, and Ownership Structure", Mimeo Mabry, Bevars D, and Siders, David L, 1967, An Empirical Test of the Sales Maximization Hypothesis, Southern Economic Review 3, 367-377 Manne, Henry G, 1965, Mergers and the Market for Corporate Control, Journal of Political Economy 72, 110- 120 McGuire, Joseph W, Chiu, John S. Y, and Elbing, Alvar 0, 1962, Executive Incomes, Sales and Profits, American Economic Review 52, 753-761 Monsen R. Joseph, Chiu, John S, and Cooley, David E, 1968, The Effect of Separation of Ownership and Control on the Performance of the Large Firm, Quarterly Journal of Economics 82, 435-451 North, Douglass C, 1983, Comment on Stigler and Friedland "The Literature of Economics: The Case of Berle and Means", Journal of Law and Economics 3, 269-271 Oakenshott, Robert, The Case for Workers' Co-ops, London, Routledge and Kegan Paul Pindyck, Robert S, and Downs, Daniel L, 1981, Econometric Models and Economic Forecasts, McGraw - Hill International Book Company, Tokyo, Japan Perfect, Steven B, Peterson, David R, and Peterson, Pamela P, 1995, Self-tender offers: The effects of free cash flow, cash tlow signalling, and the measurement of Tobin's q, Journal of Banking Finance 19, 1005-1023 Radice, H.K, 1971, Control Type, Profitability and Growth in Large Firms: An Empirical Study, Economic Journal 3,547-562 Ross, Stephen A, 1973, The Economic Theory of Agency: The Principal's Problem, The American Economic Review 63, 134-139 Rozeff, M, 1982, Growth, Beta and Agency Costs as Determinants of Dividend Payout Ratios, Journal of Financial Research 5, 249-259 Savage, Christopher I, and Small, John R, 1967, Introduction to Managerial Economics, Hutchinson & Co, London Schmalensee, Richard, 1981, Risk and Return on Long-Lived Tangible Assets, Journal of Financial Economics 9, 185-205 Schmalensee, Richard, 1985, Do Markets Differ Much?, The American Economic Review 75, 341-351 Scitovszky, T De, 1943, A Note on Profit Maximisation and its Implications, Review of Economic Studies, 57-60 Shavell, Steven, 1979, Risk Sharing and Incentives in the Principal and Agent Relationship, The Bell Journal of Economics 10, 55-73 Simon, Herbert, 1959, Theories of Decision Making in Economics and Behavioural Science, American Economic Review 49, 253-83 Sincich, Terry, 1992, Business Statistics by Example, Maxwell MacMillan, Singapore Smirlock, Michael, Gilligan, Thomas, and Marshall, William, 1986, Tobin's q and the Structure-Performance Relationship: Reply, American Economic Review 76, 1211-1213 Smith, Abbie J, 1990, Corporate Ownership Structure and Performance, The Case of Management Buyouts, Journal of Financial Economics 27, 143 -164 SPSS Base 10.0 Applications Guide, 1999, SPSS Inc, United States of America SPSS Base 10.0 User's Guide, 1999, SPSS Inc, United States of America Stigler, George J, and Friedland, Claire, 1983, The Literature of Economics: The Case of Berle and Means, Journal of Law and Economics 3, 236-268 Thornton, Daniel B, 1984, A Look at Agency Theory for the Novice - Part 1, CA Magazine, November, 90-97 Thornton, Daniel B, 1984, A Look at Agency Theory for the Novice - Part 2, CA Magazine, January, 93-100 Weston, J.F, 1979, The Tender takeover, Mergers and Acquisitions, 74-82 Whittington, Geoffrey, 1983, Inflation Accounting: An Introduction to the Debate, Cambridge: Cambridge University Press Williamson, Oliver E, 1963, Managerial Discretion and Business Behavior, American Economic Review, 1032- 105

Inside ownership and performance: Evidence from the horse racing industry

Owners of assets (principals) have always faced the problem of entrusting their assets with other people (agents) who use these assets in some way other than what the principal desire, a phenomenon commonly known as the 'agency problem'. Research into the agency problem has sought to determine what motivates agents, and what can be done to minimise the divergence between the agent's actions and the principal's best interests. One area of such research investigates the what happens to firm performance when the agent/principal distinction is lessened by the agent acquiring some ownership stake in the asset. The predictions from theoretical research, and support from empirical research, into the relationship between inside ownership and performance varies significantly. The inconsistency between different empirical studies into the relationship between inside ownership and performance may be due to problems suffered by the corporate data used in these studies. This thesis investigates the inside ownership/performance relationship utilising non-corporate data, specifically horse racing data, in an attempt to avoid these problems. In general, the results from this thesis suggest that a negative relationship exists between trainer ownership and performance. These results support labour market discipline theories which predict that a negative relationship could exist between trainer ownership and performance.UnpublishedAlchian, Armen A, and Demsetz, Harold, 1972, Production, Information Costs, and Economic Organization, American Economic Review, 62, 777-795 Ang, James S, Cole, Rebel A, and Wuh, Lin James, 2000, Agency Costs and Ownership Structure, Journal of Finance 55, 81-106 Anton, Howard, 1988, Calculus with Analytic Geometry, John Wiley & Sons, Third Edition Barnard, C.I, 1962, The Functions of the Executive, Cambridge Barnhart, Scott W, and Rosenstein, Stuart, 1998, Board Composition, Managerial Ownership, and Firm Performance: An Empirical Analysis, The Financial Review 33, 1-16 Baumol, William J, 1959, Business Behaviour, Value and Growth, New York: Macmillan Becker, G.S, 1962, Competition, Monopoly, and the Pursuit of Pecuniary Gain: Comment, Aspects of Labor Economics, Princeton Benston, George J, 1985, The Validity of Profits-Structure Studies with Particular Reference to the FTC's Line of Business Data, The American Economic Review 75, 37-67 Berle, Adolf A. Jr., and Means, Gardner C, 1932, The modern corporation and private property (Macmillan, New York) Berman, Katrina V, and Berman, Matthew D, 1989, An Empirical Test of the Theory of the Labor-Managed Firm, Journal of Competition Economics 13, 281-300 Bhabra, Gurmeet Singh, and Maling, Hannah, 2000, Managerial Ownership and Firm Value: Evidence from New Zealand, Working Paper Bonin, John P, Jones, Derek C, and Putterman, Louis, 1993, Theoretical and Empirical Studies of Producer Cooperatives: Will Ever the Twain Meet, Journal of Economic Literature 31, 1290-1320 Boschen, John F, and Smith, Kimberly J, 1995, You Can Pay Me Now and You Can Pay Me Later: The Dynamic Response of Executive Compensation to Firm Performance, Journal of Business 68, 577-608 Chen, Carl R, and Steiner, Thomas L, 2000, Tobin's Q, Managerial Ownership, and Analyst Coverage, Journal of Economics and Business 52, 356-382 Chen, Kevin C.W, and Lee, C.W. Jevons, 2000, Accounting Measures of Business Performance and Tobin's q Theory, Journal of Accounting, Auditing & Finance 10, 587-609 Coase, R.H, 1937, The Nature of the Firm, Economica 4, 386-405 Cyert, Richard M, and March, James G, 1963, A Behavioural Theory of the Firm, Englewood Cliffs, N.J.: Prentice-Hall, 1963 Defourny, Jacques, 1992, Comparative Measures of Technical Efficiency for 500 French Workers' Cooperatives, Advances in the Economic Analysis of Participatory and Labor-Managed Firms 4, 27-62 Defourny, Jacques, Estrin, Saul, and Jones, Derek C, 1985, The Effects of Workers' Participation on Enterprise Performance, International Journal of Industrial Organisations 3, 197-217 Demsetz, Harold, and Lehn, Kenneth, 1985, The Structure of Corporate Ownership: Causes and Consequences, Journal of Political Economy 93, 1155-1177 Estrin, Saul, 1983, Self Management: Economic Theory and Yugoslav Practice, Cambridge, Cambridge University Press Estrin, Saul, Jones, Derek C, and Svejnar, Jan, 1987, The Productivity Effects of Worker Participation: Producer Cooperatives in Western Economics, Journal of Competitive Economics 11, 40-61 Fama, Eugene F, 1980, Agency Problems and the Theory of the Firm, Journal of Political Economy 88, No 2, 288-307 Gordon, R.A, 1961, Business Leadership in the Large Corporation, Berkeley Hansmann, Henry, 1990, The Viability of Worker Ownership: an Economic Perspective on the Political Structure of the Firm, The Firm as a Nexus of Treaties, London, Sage Publishing, 162-184 Hermalin, Benjamin E, and Weisbach, Michael S, 1991, The Effects of Board Composition and Direct Incentives on Firm Performance, Financial Management 20, 101-114 Himmelberg, Charles P, Hubbard, R. Glenn, and Palia, Darius, 1999, Understanding the determinants of managerial ownership and the link between ownership and performance, Journal of Financial Economics 53, 353-384 Hirsch, Barry T, and Seaks, Terry G, 1993, Functional Formin Regression Models of Tobin's q, The Review of Economics and Statistics 75, 381-385 Horvat, Branko, 1982, The Political Economy of Socialism, Armonk NY, M.E. Sharpe Jensen, Michael C, and Meckling, William H, 1976, Theory of the Firm: Managerial Behaviour, Agency Costs and Ownership Structure, Journal of Financial Economics 3, 305-360 Jensen, Michael C, Meckling, William H, 1979, Rights and Production Functions: An Application too Labor- Managed Firms and Codetermination, Journal of Business 52, 469-506 Jensen, Michael C, and Murphy, Kevin J, 1990b, Performance Pay and Top-Management Incentives, Journal of Political Economy 98, 225-264 Jones, Derek C, and Backus, David K, 1977, British Producer Cooperatives in the Footwear Industry: An Empirical Test of the Theory of Financing, Economic Journal 87, 488-510 Jones, Derek C, and Svejnar, Jan, 1985, Participation, Profit Sharing, Worker Ownership and Efficiency in Italian Producer Cooperatives, Economica 55, 449-465 Kaysen, K, 1960, The Corporation: How Much Power? What Scope? The Corporation in Modern Society, ED E.S. Mason Kempthorne, Oscar, 1952, The Design and Analysis of Experiments, John Wiley & Sons, Inc, Canada Kole, Stacey R, 1995, Measuring Managerial Equity Ownership: a Comparison of Sources of Ownership Data, Journal of Corporate Finance 1, 413 - 435 Lee, Barbara, 1988, Productivity and Employee Ownership: The Case of Sweden, Stockholm, Sweden: Trade Union Institute for Economic Research Lee, Darrell E, and Tompkins, James G, 1999, A modified version of the Lewellen and Badrinath measure of Tobin's Q, Financial Management 28, 20-31 Leibenstein, Harvey, 1966, Allocative Efficiency Vs. "X-Efficiency", American Economic Review 61, 392-415 Lewellen, W, 1969, Management and Ownership in the Large Firm, Journal of Finance 24, 299-322 Lewellen., Wilbur G, and Badrinath, S.G, 1997, On the Measurement of Tobin's q, Journal of Financial Economics 44, 77-122 Lindenber, Eric B, and Ross, Stephen A, 1981, Tobin's q Ratio and industrial Organization, Journal of Business 54,1-32 Loderer, Claudio, and Martin, Kenneth, 1997, Executive stock ownership and performance: Tracking faint traces, Journal of Financial Economics 45, 223-255 McConnell, John J, and. Servaes, Henri, 1990, Additional Evidence on Equity Ownership and Corporate Value, Journal of Financial Economics 27, 595-612 Manly, Bryan F.J, 1992, The design and analysis of research studies, Press Syndicate of the University of Cambridge, Cambridge Monsen, R. Joseph, and Downs, Anthony, 1965, A Theory of Lar ge Managerial Firms, The Journ aolf Political Economy, 221-236 Morck, Randall, Shleifer, Andrei, and Vishny, Robert W, 1988, Management Ownership and Market Valuation, Journal of Financial Economics 20, 293-315 Reder, M.W, 1947, A Reconsideration of the Marginal Productivity Theory, Journal of Political Economy 55, 450-458 Reekie, W. Duncan, 1975, Managerial Economics, Camelot Press Limited, Philip Allan Publishers, Oxford Shepherd, William G, 1986, Tobin's q and the Structure-Performance Relationship: Reply, The American Economic Review 76, 1205-1210 Short, Helen, and Keasey, Kevin, 1999, Managerial Ownership and the Performance of Firms: Evidence from the UK, Journal of Corporate Finance 5, 79-101 Simon, Herbert, 1961, Administrative Behaviour, New York Smirlock, Michael, Gilligan, Thomas, and Marshall, William, 1984, Tobin's q and the Structure-Performance Relationship, American Economic Review, 1051-1060 Smith, Adam, 1776, The Wealth of Nations, Cannan Edition, Fifth Edition, 1930, Methuen & Co. LTD London Steiner, Thomas Lorenz, 1996, A Reexamination of the relationships between ownership structure, firm diversification and Tobins Q, Journal of Business and Economics 35, 39-48 Stutz, Rene M, 1998, Managerial Control of Voting Rights, Journal of Financial Economics 20, 25-54 Weitzman, Martin L, and Kruse, Douglas L, 1990, Profit Sharing and Productivity, Paying for Productivity: A Look at the Evidence, Washington DC, Brookings Institution, 95-141 Wernerfelt, Birger, and Montgomery, Cynthia A, 1988, Tobin's q and the Importance of Focus in Finn Performance, The American Economic Review 78, 246-250 Williamson, Oliver E, 1964, The Economics of Discretionary Behavior: Managerial Objectives in a Theory of the Firm Englewood Cliffs, N.J.: Prentice-Hall Williamson, Oliver E, 1980, The Organisation of Work: A Comparative Institutional Assessment, Journal of Economic Behavior Organisations 1, 5-8 Related Works Alchian, Armen A, and Kessel, Reuben A, 1962, Competition, Monopoly, and the Pursuit of Money, Aspects of Labor Economics, National Bureau of Economic Research, Princeton University Press, Princeton, N.J. 157-183 Attaway, Morris C, 2000, A Study of the relationship between company performance and CEO compensation, American Business Review18, 77-85 Bamberg, G, and Spremann, K, 1987, Agency Theory, Information, and Incentives, Springer-Varlag, Berlin Beedles, William L, 1977, A Micro-Economic Investigation of Multi-Objective Firms, The Journal of Finance 32, 1217-1233 Bothwell, James L, 1980, Profitability, Risk and the Separation of Ownership from Control, The Journal of Industrial Economics 28, 303-311 Boudreaux, Kenneth J, 1973, `Managerialism' and Risk Return Performance, Southern Economic Journal 39, 366-372 Bower, Richard S, 1969, Discussion, The Journal of Finance 24, 339-341 Cohen., Kalman J, and Cyert, Richard M, 1965, Theory of the Firm: Resource Allocation in a Market Economy, Prentice Hall Inc, Englewood Cliffs, New Jersey Copeland, Thomas E, and Weston, J. 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Holding onto Your Horses: Conflicts of Interest in Asset Management

Racehorse trainers operate unregulated asset management businesses in which the assets owned by outside clients compete with those owned by trainers for the latter’s time, care, and attention. However, market mechanisms appear to deal effectively with the resulting agency problem in situations where it matters most. In a sample of 8,000 racehorses and their associated stables, we find that client-owned horses do indeed perform worse than their trainer-owned counterparts in small stables that have relatively few outside clients but that the reverse is true in large stables where client-owners provide much of the trainer’s income: agents with more to lose apparently behave better. Moreover, they appear to have good reasons for behaving better: client-owned horses that underperform are more likely to be transferred to another stable, thereby causing a loss of income for the original trainer.