The Profit Performance Effects of the Separation of Ownership From Control in Large U.S. Industrial Corporations*

Abstract

the members of the Iowa State industrial organization s-.minar, and the participants in the economics seminar at Miami Univer sity all gave me useful suggestions in the development of the model in Chapter IV, William Kennedy supervised the computer work for some of the statistical tests of Chapter VI. Theodore Thornton, Charlotte Latta, and Shu Huang lent research and computational assistance in the early stages. Professors R.

Risk Return, and Managerial Objectives: Some Evidence From the Savings and Loan Industry

“…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]. …”

Corporate Capital Investment, Accounting Methods and Earnings: A Test of the Control Hypothesis

“…Monsen, Chiu and Cooley [1968] and Stano [1976] have found that the returns to shareholders of the owner‐controlled firms have been higher than for the manager‐controlled firms; Kamerschen [1968] and Larner [1970] could not find support for that conclusion. Palmer [1973] concluded that the type of control becomes a significant factor only in the presence of a high degree of monopoly power. The relationship between investment and income provides an interesting basis to the effect of the nature of control on firm's decisions.…”

“…I have used the data on control of firms gathered by Palmer [1973] and refined by Stano [1976] 6 . Palmer started with the Fortune 500 firms for 1965 and identified each firm as being manager‐controlled, weakly owner‐controlled and strongly owner‐controlled depending on the fraction of total outstanding stock of the firm held by a single party being in the ranges 0–10, 10–30 and 30–100 percent.…”

Agency theory and the influence of equity ownership structure on corporate diversification strategies

“…Amihud and Lev (1981) and Lane et al (1998) test the relation between ownership structure and diversification by examining the incidence of conglomerate mergers among Fortune 500 firms between 1961 and 1970. Both sets of authors compare the incidence of conglomerate mergers across three ownership categories as defined in Palmer (1973). A strong owner-controlled firm is one in which a single party owns at least 30 percent of the firm's shares.…”