We analyze the determinants of ownership structure in firms when conflicts of interest on risk arise endogenously via different ownership stakes and firm decisions are made through majority voting. A large block is chosen to incentivize monitoring. Because a large blockholder holds a large share of the firm, he is averse to risky investing. This generates a conflict of interest with dispersed s...

Mutual fund providers serve two principals with opposing interests: their owners, who want them to maximize profits, and their fund shareholders, who want them to maximize fund returns. I investigate what role is played by customer power and information, as well as by competition among fund providers in influencing the balance of power between these two opposing principals. Using a data set of ...

Many firms have more than one blockholder, but finance theory suggests that one blockholder should be sufficient to bestow all benefits on a firm that arise from concentrated ownership. This paper identifies a reason why more blockholders may arise endogenously. We consider a setting where multiple shareholders have endogenous conflicts of interest depending on the size of their stake. Such con...

this study addresses executive compensation from shareholders perspective by empirically examining the effects of chief executive officer (ceo) compensation on firm performance subsequent to the year of compensation. three factors of ceo compensation are examined, size, total annual compensation; form percentage of total compensation comprised of cash, cash bonuses and stock; and sensitivity. t...

This paper investigates the preferences of a firm’s current and future shareholders for the quality of mandated public disclosures. In contrast to earlier studies, our analysis takes into account the effect of the quality of public information on the firm’s internal investment decisions. We show that while the firm’s investment is monotonically increasing in the quality of public information, t...

In this paper the investment and liquidation policy of a levered firm is analyzed. The possibility of renegotiating the original debt contract is included. It is shown that the shareholders’ option to restructure the outstanding debt exacerbates Myers’ (1977) underinvestment problem. This result is due to a higher wealth transfer from the shareholders to the creditors occurring upon investment ...