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Monopoly Power, Ownership Control, and Corporate Performance

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  • Miron Stano

Abstract

The performance criterion receiving the closest attention in the literature on "managerialism" is the rate of return on stockholders' equity. It is argued here that of more immediate concern to the shareholder is the rate of return on his investment in the stock of the firm. The determinants of ex post stock return are examined for evidence of managerial discretion. When the means by which managerial discretion may be manifested is correctly specified, the results show that the decisions of executives of management-controlled firms have conflicted with the interests of these firms' shareholders. Shareholders of owner-controlled firms have been provided with a significantly higher rate of return than shareholders of management-controlled firms.

Suggested Citation

  • Miron Stano, 1976. "Monopoly Power, Ownership Control, and Corporate Performance," Bell Journal of Economics, The RAND Corporation, vol. 7(2), pages 672-679, Autumn.
    • Handle: RePEc:rje:bellje:v:7:y:1976:i:autumn:p:672-679
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    Cited by:

    1. J. Mulherin, 2005. "Corporations, collective action and corporate governance: One size does not fit all," Public Choice, Springer, vol. 124(1), pages 179-204, July.
    2. Andy Cosh & Paul Guest & Alan Hughes, 2007. "UK Corporate Governance and Takeover Performance," Working Papers wp357, Centre for Business Research, University of Cambridge.
    3. Mendelson, Haim & Pillai, Ravindran R., 1999. "Information Age organizations, dynamics and performance," Journal of Economic Behavior & Organization, Elsevier, vol. 38(3), pages 253-281, March.
    4. Haim Mendelson, 2000. "Organizational Architecture and Success in the Information Technology Industry," Management Science, INFORMS, vol. 46(4), pages 513-529, April.
    5. Kumari Ranjita & Kumar Nishant, 2020. "Ownership Structure and the Risk: Analysis of Indian Firms," Acta Universitatis Sapientiae, Economics and Business, Sciendo, vol. 8(1), pages 39-52, October.
    6. Henry Tosi, 2008. "Quo Vadis? Suggestions for future corporate governance research," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 12(2), pages 153-169, May.
    7. Andy Cosh & Paul M. Guest & Alan Hughes, 2006. "Board Share‐Ownership and Takeover Performance," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 33(3‐4), pages 459-510, April.
    8. Wang, Kun Tracy & Shailer, Greg, 2017. "Family ownership and financial performance relations in emerging markets," International Review of Economics & Finance, Elsevier, vol. 51(C), pages 82-98.

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