IS INTERNATIONAL DIVERGENCE FROM WIDE STOCK OWNERSHIP DISPERSION AN OPTIMAL CORPORATE OUTCOME?
IS INTERNATIONAL DIVERGENCE FROM WIDE STOCK OWNERSHIP DISPERSION AN OPTIMAL CORPORATE OUTCOME?
Author(s): Andy JIA-YUH YEHSubject(s): Economy, Business Economy / Management, Financial Markets
Published by: Editura Tehnopress
Keywords: dynamic convergence of Berle-Means incumbent stock ownership dispersion; law and finance; corporate governance; investor protection; managerial entrenchment; rent protection;
Summary/Abstract: We design a model of corporate ownership and control to assess Berle-Means convergence toward diffuse incumbent stock ownership. Berle-Means convergence occurs when legal institutions for investor protection outweigh in relative importance the firm-specific protection of shareholder rights. While these arrangements are complementary sources of investor protection, Berle-Means convergence draws the corporate outcome to the socially optimal quality of corporate governance. High ownership concentration creates perverse incentives for inside blockholders to steer major business decisions to the detriment of both minority shareholders and outside blockholders. Our analysis sheds skeptical light on high insider stock ownership with managerial entrenchment and rent protection.
Journal: Journal of Public Administration, Finance and Law
- Issue Year: 2023
- Issue No: 27
- Page Range: 183-214
- Page Count: 32
- Language: English
