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Ownership Concentration and the Theory of the Firm: A Simple-Game-Theoretic Approach

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  • Leech, Dennis

Abstract

A model of the shareholder constraint is described in terms of the relationship between shareholding concentration and corporate control. A unified perspective (including takeovers as a special case) is developed whereby leading coalitions are costly to form and possess power in a shareholder voting game. Control is defined in terms of power indices for simple games. A static theory of the firm is developed in terms of the optimal formation of controlling coalitions. A dynamic theory of an owner-controlled firm is described which explains increasing shareholding dispersion accompanying growth. Copyright 1987 by Blackwell Publishing Ltd.

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  • Leech, Dennis, 1987. "Ownership Concentration and the Theory of the Firm: A Simple-Game-Theoretic Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 35(3), pages 225-240, March.
    • Handle: RePEc:bla:jindec:v:35:y:1987:i:3:p:225-40
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    Cited by:

    1. Leech, Dennis, 1999. "Minority Control: An Analysis of British Companies using Voting Power Indices," Economic Research Papers 269251, University of Warwick - Department of Economics.
    2. Leech, Dennis, 2002. "Incentives To Corporate Governance Activism," The Warwick Economics Research Paper Series (TWERPS) 632, University of Warwick, Department of Economics.
    3. Miguel Manjon, 2007. "Does the proxy for shareholders' control make a difference in firm-performance regressions? Evidence from a blockholder system of corporate governance," Applied Economics Letters, Taylor & Francis Journals, vol. 14(6), pages 445-449.
    4. Leech, Dennis, 2002. "Incentives to Corporate Governance Activism," Economic Research Papers 269406, University of Warwick - Department of Economics.
    5. Dennis Leech, 2001. "Shareholder Voting Power and Corporate Governance: A Study of Large British Companies," Nordic Journal of Political Economy, Nordic Journal of Political Economy, vol. 27, pages 33-54.
    6. Leech, Dennis, 2002. "Shareholder Voting Power and Ownership Control of Companies," Economic Research Papers 269335, University of Warwick - Department of Economics.
    7. Rafael Crespi, 1993. "Protecciones anti-opa y concentración de la propiedad: el poder de voto," Economics Working Papers 32, Department of Economics and Business, Universitat Pompeu Fabra.
    8. Javier Campos & Gilberto Vega, 2003. "Concentration Measurement Under Cross-ownership: The Case of the Spanish Electricity Sector," Journal of Industry, Competition and Trade, Springer, vol. 3(4), pages 313-335, December.

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