The Ownership and Control of Industry

Nyman, Steve; Silberston, Aubrey

doi:10.1007/978-1-4613-4231-1_3

Cited by 46 publications

(39 citation statements)

References 13 publications

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“…These costs may occur in explicit ways, such as the excessive use of prerequisites, or in implicit ways, such as suboptimal decision-making. Manager-controlled firms are more likely to maximize sales rather than profits, have a lower profit rate but less variability, engage in activities to smooth income, and engage in conglomerate mergers (Smith, 1976;Nyman and Silberston, 1978;Amihud and Kamin, 1979;Amihud and Lev, 1981). These activities have the potential of shifting wealth from the owners to the managers, unless constrained by owners.…”

Section: Theoretical Frameworkmentioning

confidence: 97%

The effect of ESOP adoptions on corporate performance: are there really performance changes?

2000

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Employee Stock Ownership Programs (ESOPs) have long been promoted as a motivational tool: employees become profit-minded owners. Latterly, however, more ESOPs are being used as part of a takeover defense: here the ESOPs main purpose is to put more company stock in friendly hands-the employees-who, like existing management, could suffer layoffs, etc. in a hostile takeover. We find that, as a group, only the takeover-related ESOPs are associated with increased leverage (itself a takeover defense). Non-target firms show no long-term increase in debt-to-assets. We find little evidence to support the motivation hypothesis: while actual labor costs are lower for ESOP firms, after industry-adjusting they tend to be unaffected or higher. We find that a few measures of firm financial performance [return-on-equity (ROE), return-on-assets (ROA), net profit margin (NPM)] do improve significantly, but this appears to be largely a short-term effect. Industry-adjusted holding period returns appear to be unaffected by the ESOP; however, ESOP firms that leverage show evidence of long-term market underperformance. We conclude that ESOPs provide, at best, only a short-term boost to corporate performance. Copyright © 2000 John Wiley & Sons, Ltd.

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Section: Theoretical Frameworkmentioning

confidence: 97%

The effect of ESOP adoptions on corporate performance: are there really performance changes?

2000

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“…Modelling the managerially controlled firm using neoclassical micro-theory has produced theories where managers pursue sales growth (Baumol, 1959), asset growth (Marris, 1964), and managerial discretion and perks (Williamson, 1964). Even though later work argued that proprietorial influence can still be strong (Nyman and Silberston, 1978); that shares are now held by institutional investors who could also exert an ownership interest; or that there is a market for control (Manne, 1965), orthodox economic theory has coalesced around the agency interpretation of corporate governance posing the following questions:…”

Section: Narrative Two: Accounting and Governabilitymentioning

confidence: 99%

Management accounting and corporate governance: An institutional interpretation of the agency problem

Seal

2006

Management Accounting Research

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“…Instead it invokes a traditional argument based on a divorce of ownership from control in large joint stock companies (Berle & Means, 1932). More recently, however, the rise of institutional firm ownership has somewhat undermined a traditional shareholder ignorance argument (Nyman and Silberson, 1978;Baldwin, 1964). In terms of corporate corruption we will see below that financial institutions seem to have been party to the corrupt practices of business firms.…”

Section: Corrupt Corporations: Basic Definitionsmentioning

confidence: 98%