An analysis of majority owner-managed companies in the UK

Research output: Contribution to journalArticle

8 Citations (Scopus)

Abstract

This paper investigates the characteristics of 73 UK companies in which managers have an ownership stake of greater than 50 per cent. We find that majority owner-managed companies make less use of alternative corporate control systems and are less likely to remove their chief executive officer or other board members following poor performance. However, our sample firms actually outperform diffusely held companies of similar size in the same industry. The determinants of majority control appear more closely related to the characteristics of the controlling shareholders rather than the firm's operating environment. Changes in the ownership structure of our sample companies owe more to changes in owner-specific characteristics and security issuance than they are related to changes in the company's operating environment or company performance. We conclude that despite the obvious agency costs of managerial entrenchment for closely held companies, for the present sample at least the incentive alignment benefits of large director shareholdings are beneficial to outside shareholders
Original languageEnglish
Pages (from-to)603-623
Number of pages21
JournalAccounting and Finance
Volume48
Issue number4
DOIs
Publication statusPublished - Dec 2008

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Owners
Chief executive officer
Security issuance
Controlling shareholders
Shareholding
Company performance
Managers
Managerial entrenchment
Corporate control
Shareholders
Industry
Agency costs
Incentive alignment
Ownership structure
Ownership

Keywords

  • corporate control
  • corporate governance
  • majority-held
  • owner-managed

Cite this

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An analysis of majority owner-managed companies in the UK. / Hillier, David; McColgan, Patrick.

In: Accounting and Finance, Vol. 48, No. 4, 12.2008, p. 603-623.

Research output: Contribution to journalArticle

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