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Ethics, Institutions, and Business Relations A Study of Collusive Incentives for Institutional Shareholders to Monitor Firm Managers

Ethics, Institutions, and Business Relations A Study of Collusive Incentives for Institutional... Our theory asserts that at low levels of ownership institutions may support management to preserve other business relations. At higher levels of ownership, institutions more actively monitor management because the gains from equity ownership exceed the cost of management review and of possible lost business. Corporate performance first decreases and then increases with the institution's ownership. Furthermore, the institutional ownershipperformance relation, especially the critical ownership level that separates management aligned institutions from efficiently monitoring ones, varies with management specific parameters managerial effort disutility, firm specific parameters firm size and whether or not the institutional owner is pressure sensitive. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Managerial Finance Emerald Publishing

Ethics, Institutions, and Business Relations A Study of Collusive Incentives for Institutional Shareholders to Monitor Firm Managers

Managerial Finance , Volume 22 (4): 9 – Apr 1, 1996

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References (15)

Publisher
Emerald Publishing
Copyright
Copyright © Emerald Group Publishing Limited
ISSN
0307-4358
DOI
10.1108/eb018556
Publisher site
See Article on Publisher Site

Abstract

Our theory asserts that at low levels of ownership institutions may support management to preserve other business relations. At higher levels of ownership, institutions more actively monitor management because the gains from equity ownership exceed the cost of management review and of possible lost business. Corporate performance first decreases and then increases with the institution's ownership. Furthermore, the institutional ownershipperformance relation, especially the critical ownership level that separates management aligned institutions from efficiently monitoring ones, varies with management specific parameters managerial effort disutility, firm specific parameters firm size and whether or not the institutional owner is pressure sensitive.

Journal

Managerial FinanceEmerald Publishing

Published: Apr 1, 1996

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