 Are all private benefits of control ineffective?: Principal‐principal benefits, external governance quality, and firm performanceSteve Sauerwald,
Pursey P. M. A. R. Heugens,
Roxana Turturea and
Marc van Essen
Post-Print from HAL 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; firm performance; institutions; comparative corporate governance (search for similar items in EconPapers) Published in Journal of Management Studies, 2019, 56 (4), 725-757 p There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:hal-02312254 Access Statistics for this paper More papers in Post-Print from HAL |
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