Corporate Ownership and Management in Small Island Developing States: Implications for Academia, Public Policy and Management Practices

Abstract

This paper analyses the ownership structure of publicly listed corporations in seventeen Small Island Developing States. The paper identifies the ultimate controlling shareholders of these firms, the identity of these shareholders, whether or not ultimate shareholders are involved in management and how ultimate shareholders maintain control over firms. The study finds that the large majority of publicly listed firms in SIDS have a dominant shareholder, that dominant shareholder is typically a family or the state, the dominant shareholder is typically involved in management through Chairmanship or representation on the Board of Directors and the dominant shareholder maintains control through cash flow rights as distinct from devices such as pyramid type ownership structures and various classes of shares. These results suggest that the notion of diffuse shareholders and a separation between ownership and management, which forms the dominant paradigm in the fields of economics, finance and management, is not the norm in SIDS. The fact that there are dominant shareholders who are active in management suggests that theories based on notions of Principal Agent Conflict and Asymmetric Information may be incomplete explanations for corporate behaviour in SIDS. The results suggest that in SIDS Principal/Principal conflict may be a larger issue than the more commonly discussed Principal/Agent conflict that in SIDS and protecting the interests of minority shareholders may be the major corporate governance challenge, as distinct from aligning the interests of shareholders and managers.