Disproportionate Insider Control and Firm Performance

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Author
Hettler, Barry
Forst, Arno
Keyword
Insider Entrenchment
Corporate Governance
Insider Ownership
Dual-Class Firms
Journal title
Accounting & Finance
Date Published
2017-06-22

Metadata
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URI
http://hdl.handle.net/20.500.12648/2095
Abstract
The effect of disproportionate insider control on firm performance is ambiguous. Disproportionate control may enhance insiders’ ability to expropriate perquisites; on the other hand, it may provide stability of management and reduce short?term market pressures. Using a hand?collected sample of U.S. dual?class firms, we find that disproportionate control is positively associated with accounting?based performance, but negatively associated with Tobin's Q. These results are consistent with the incentives of entrenched insiders who are interested in profitability but less beholden to capital markets.
Citation
Hettler, B., & Forst, A. (2017). Disproportionate insider control and firm performance. Accounting & Finance .
DOI
https://doi.org/10.1111/acfi.12279
Description
"This is the peer-reviewed version of the following article: Hettler, B., & Forst, A. (2017). Disproportionate insider control and firm performance. Accounting & Finance . which has been published in final form at https://doi.org/10.1111/acfi.12279 . This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions." --- We thank participants at the American Accounting Association (AAA) 2016 Annual as well as the AAA 2016 Ohio region meeting for their helpful comments.
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