Modelling the objective function of managers in the presence of overlapping shareholding

• Tipo: Artigo em Revista Científica Internacional
• Data: 2023

Autores

Brito, D (Autor) Outra; Elhauge, E (Autor) Outra; Ribeiro, R (Autor) Outra; Helder Vasconcelos (Autor) FEP

Revista

Título: International Journal of Industrial Organization

Vol. 87

ISSN: 0167-7187

Editora: Elsevier

Indexação

ISI Web of Knowledge - 2 Citações

Scopus - 2 Citações

Outras Informações

ID Authenticus: P-00X-RHY

DOI: 10.1016/j.ijindorg.2022.102905

Abstract (EN): The objective function of managers in the presence of overlapping shareholding may differ from the traditional own-firm profit maximization, as they may internalize the externalities their strategies impose on other firms. The dominant formulation of the objective function in such cases has, however, been criticised for yielding counter-intuitive profit weights when the ownership of non-overlapping shareholders is highly dispersed. In this paper, we examine this issue. First, we make use of a probabilistic voting model (in which shareholders vote to elect the manager) to microfound an alternative formulation of the objective function of managers, which solves the above-mentioned criticism. Second, we apply the two formulations to the set of S&P 500 firms. We show that ownership dispersion of non-overlapping shareholders is, in fact, a relevant empirical issue, which may induce an over-quantification of the profit weights computed from the dominant formulation, particularly under a proportional control assumption.(c) 2022 The Authors. Published by Elsevier B.V. This is an open access article under the CC BY-NC-ND license ( http://creativecommons.org/licenses/by-nc-nd/4.0/ )

Idioma: Inglês

Tipo (Avaliação Docente): Científica

Nº de páginas: 25