Corporate Control and Risk

McEachern, William

doi:10.1111/j.1465-7295.1976.tb00393.x

Cited by 27 publications

(14 citation statements)

References 8 publications

(2 reference statements)

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“…This could be probably one of the reasons for a slower growth than if they sought to maximize profi ts. McEachern (1976), too, found that there is more market-related risk in the owner-managed fi rms. Stano (1976) has a different view, according to which, since management-controlled fi rms are more leveraged and the rate of return is highly volatile, growth rate is low and performance is poor.…”

Section: The Relation Between Ownership and Riskmentioning

confidence: 98%

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Ownership Structure and the Risk: Analysis of Indian Firms

Kumari

Kumar

2020

Acta Universitatis Sapientiae, Economics and Business

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Considering the positive relationship between ownership and firm performance in the corporate finance literature, the paper aims to investigate the effect of ownership structure on the risk associated with the firm. Portfolio theories state that an investment with a high return is expected to be associated with high risk; so, it can be argued that ownership should have a positive relation with risk too. However, another explanation is that since large shareholders, such as promoters and financial institutions, have a significant stake in firms, in developing countries like India they will avoid excess risk taking, and so there should be a negative relationship between ownership and risk associated with firms. Analysing Nifty-500 companies for the period of 2006/07–2015/16, the study has found that Indian blockholders are in general risk-averse. Results also suggest that profitability and growth opportunities have negative effects on risk, which again establishes the positive association between ownership structure and profitability.

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Section: The Relation Between Ownership and Riskmentioning

confidence: 98%

“…Variations in profi tability are one of those measures which have been used by Cheng (2008) and Kakani et al (2001). McEachern (1976) used CAPM beta as their measure of risk. Many authors have applied methods using equity and market returns to calculate systematic and idiosyncratic risk.…”

Section: Riskmentioning

confidence: 99%

Ownership Structure and the Risk: Analysis of Indian Firms

Kumari

Kumar

2020

Acta Universitatis Sapientiae, Economics and Business

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“…NOTES 1. Numerous studies have been conducted on the effect of the separation of ownership from control, with findings ranging from highly significant to no significant difference in corporate performance (Kamerschen, 1968;McEachern, 1975McEachern, , 1976; McKean and Kania, 1978;Palmer, 1973; Sorenson, 1974…”

Section: Grammentioning

confidence: 99%

Ownership effects on operating strategies: Evidence of expense‐preference behavior in the hospital industry

1994

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Expense preference offers an alternative to profit‐maximization theory in explaining firms' operating strategies (Williamson, 1963; Rees, 1974). Expense‐preference theory suggests that when disctretionary behavior is allowed, corporate managers may choose to maximize individual utility instead of corporate profit. Expense‐preference behavior tends to be evidenced by higher expenditures on items for which managers have a positive personal preference than would be justified by profit maximization. Conditions under which significant managerial discretion can emerge include weak competition, strictly controlled entry, a high degree of regulation, separation of ownership and control, and existence of a strong public interest character for the firm or industry (Awh and Primeaux, 1985; Edwards, 1977). The hospital industry may be characterized as operating under all the above conditions. Hospital ownership can be classified as being either not‐for‐profit or proprietary. Profit‐maximization influences are generally not present in not‐for‐profit hospitals, thus further increasing managerial discretion with respect to operating expenses. This study provides support for the contention that expense‐preference behavior exists in not‐for‐profit hospitals as compared to proprietary hospitals. Specifically, we present evidence of considerable managerial discretion in the allocation of resources in not‐for‐profit hospitals.

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“…Evidence from these studies ranges from findings of no significant difference in profit performance to significantly higher profit levels of owner‐controlled enterprises. Recent representative studies in this area include [17, 18, 23, 24, 25, 27, 28, 29].…”

Section: $10‐$25 $25‐$50 $50‐$100 $100‐$250 $250‐$500 Over $500 Totalmentioning

confidence: 99%

“…Evidence from these studies ranges from findings of no significant difference in profit performance to significantly higher profit levels of owner-controlled enterprises. Recent representative studies in this area include [17,18,23,24,25,27, 28,29]. 2 As of the end of 1978 stock SLAs accounted for approximately 17 percent of the total number of FSLIC-insured SLAs and 23 percent of total industry assets.…”

mentioning

confidence: 99%