Corporate control and executive selection

Francesco Lippi and Fabiano Schivardi

Quantitative Economics, 2014, vol. 5, 417-456

Abstract: In firms with concentrated ownership the controlling shareholder may pursue nonmonetary private returns, such as electoral goals in a firm controlled by politicians or family prestige in family firms. We use a simple theoretical model to analyze how this mechanism affects the selection of executives and, through this, the firm's productivity compared to a benchmark where the owner only cares about the value of the firm. We discuss identification and derive two structural estimates of the model, based on different sample moments. The estimates, based on a matched employer–employee data set of Italian firms, suggest that private returns are larger in family‐ and government‐controlled firms than in firms controlled by a conglomerate or by a foreign entity. The resulting distortion in executive selection can account for total factor productivity differentials between control types of up to 10%.

Date: 2014
References: Add references at CitEc
Citations: View citations in EconPapers (19)

Downloads: (external link)
http://hdl.handle.net/10.1111/quan.2014.5.issue-2.x

Related works:
Working Paper: Corporate Control and Executive Selection (2010)
Working Paper: Corporate Control and Executive Selection (2010)
Working Paper: Corporate Control and Executive Selection (2010)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:wly:quante:v:5:y:2014:i::p:417-456

Ordering information: This journal article can be ordered from
https://www.econometricsociety.org/membership

Access Statistics for this article

More articles in Quantitative Economics from Econometric Society Contact information at EDIRC.
Bibliographic data for series maintained by Wiley Content Delivery ().