Are All Private Benefits of Control Ineffective? Principal–Principal Benefits, External Governance Quality, and Firm Performance

Research output: Contribution to journalArticleScientificpeer-review

Standard

Are All Private Benefits of Control Ineffective? Principal–Principal Benefits, External Governance Quality, and Firm Performance. / Sauerwald, Steve; Heugens, Pursey P.M.A.R.; Turturea, Roxana; Van Essen, Marc.

In: Journal of Management Studies, Vol. 56, No. 4, 2019, p. 725-757.

Research output: Contribution to journalArticleScientificpeer-review

Harvard

APA

Vancouver

Author

Bibtex - Download

@article{cff22b3a140f45bead59ea2add833bb7,
title = "Are All Private Benefits of Control Ineffective? Principal–Principal Benefits, External Governance Quality, and Firm Performance",
abstract = "Private benefits of control (PBC) are benefits that controlling shareholders consume, but that are not shared with minority shareholders. Research focusing on the value protection role of corporate governance typically frames PBC as principal-principal (PP) agency costs, and interprets them as a form of minority shareholder expropriation that decreases firm performance. Taking a value creation perspective of corporate governance, however, we propose a more nuanced role for PBC. Specifically, we see them also as principal-principal (PP) agency benefits that compensate controlling shareholders for their monitoring and advisory services, which can increase firm performance. Since both PP costs and benefits affect firm performance, we theorize that PBC enhance firm performance at a diminishing rate. Furthermore, we show that the effect of PBC on firm performance is more positive when country-level external governance mechanisms are strong",
keywords = "private benefits of control, controlling shareholders, control transactions, institutions, comparative corporate governance, firm performance",
author = "Steve Sauerwald and Heugens, {Pursey P.M.A.R.} and Roxana Turturea and {Van Essen}, Marc",
year = "2019",
doi = "10.1111/joms.12420",
language = "English",
volume = "56",
pages = "725--757",
journal = "Journal of Management Studies",
issn = "0022-2380",
publisher = "Wiley",
number = "4",

}

RIS - Download

TY - JOUR

T1 - Are All Private Benefits of Control Ineffective? Principal–Principal Benefits, External Governance Quality, and Firm Performance

AU - Sauerwald, Steve

AU - Heugens, Pursey P.M.A.R.

AU - Turturea, Roxana

AU - Van Essen, Marc

PY - 2019

Y1 - 2019

N2 - Private benefits of control (PBC) are benefits that controlling shareholders consume, but that are not shared with minority shareholders. Research focusing on the value protection role of corporate governance typically frames PBC as principal-principal (PP) agency costs, and interprets them as a form of minority shareholder expropriation that decreases firm performance. Taking a value creation perspective of corporate governance, however, we propose a more nuanced role for PBC. Specifically, we see them also as principal-principal (PP) agency benefits that compensate controlling shareholders for their monitoring and advisory services, which can increase firm performance. Since both PP costs and benefits affect firm performance, we theorize that PBC enhance firm performance at a diminishing rate. Furthermore, we show that the effect of PBC on firm performance is more positive when country-level external governance mechanisms are strong

AB - Private benefits of control (PBC) are benefits that controlling shareholders consume, but that are not shared with minority shareholders. Research focusing on the value protection role of corporate governance typically frames PBC as principal-principal (PP) agency costs, and interprets them as a form of minority shareholder expropriation that decreases firm performance. Taking a value creation perspective of corporate governance, however, we propose a more nuanced role for PBC. Specifically, we see them also as principal-principal (PP) agency benefits that compensate controlling shareholders for their monitoring and advisory services, which can increase firm performance. Since both PP costs and benefits affect firm performance, we theorize that PBC enhance firm performance at a diminishing rate. Furthermore, we show that the effect of PBC on firm performance is more positive when country-level external governance mechanisms are strong

KW - private benefits of control

KW - controlling shareholders

KW - control transactions

KW - institutions

KW - comparative corporate governance

KW - firm performance

U2 - 10.1111/joms.12420

DO - 10.1111/joms.12420

M3 - Article

VL - 56

SP - 725

EP - 757

JO - Journal of Management Studies

JF - Journal of Management Studies

SN - 0022-2380

IS - 4

ER -

ID: 30375571