Group Of Shareholders Research Articles

Attitudes and expectations of shareholders: The case of the multi-generation family business

As family shareholder support is essential for the ongoing viability of the business as a family business, multi-generation family businesses which allow ‘the ownership tree’ to grow need to monitor the attitudes and expectations of the expanding number of family member shareholders. This paper reports on a case study of a multi-generation family business where the shareholder group had grown to 50 individual shareholders. The study explored the shareholders' views about the business and particularly their attitudes to stewardship and whether and under what circumstances, they would hold their shareholdings, pass them to the next generation of family or possibly consider relinquishing their holdings. Data was obtained from a semi-structured questionnaire and follow-up interviews. While respondents indicated that they had immense pride in being a shareholder of the family business, they admitted that their knowledge of that business was less than optimal. Financial returns were viewed as important, but the intangible rewards relating to the heritage of forebears were more so. While they were keen to pass on their shares to their children, they were uncertain about the level of commitment the next generation members would have. Lessons from this case study are discussed for other multi-generation family businesses focusing on shareholders' responsibilities as owners and the board's need to ensure timely transfer of knowledge to the wider shareholder group.

Governing Corporations with Concentrated Ownership Structure: Can Hedge Funds Activism Play Any Role in Italy?

In the last three years several corporate studies have pointed out the multiple facets of the hedge funds activism by describing what characteristics this phenomenon has, what differences hedge funds have compared to traditional institutional investors and what might be the reasons of their success. Hence, this paper aims to understand whether this theoretical pattern describing hedge funds and asserting that their activism can have positive effects on the governance (and, thus, the efficiency) of corporations may apply outside the U.S. system. More precisely, the purpose of this research is primarily to understand if and how the same phenomenon may occur in different legal and economic systems where corporations have a rather concentrated ownership structure (and, thus, it should be more difficult for a hedge fund to credibly threaten the management), and particularly in Italy where the largest majority of listed companies are controlled by a single shareholder or a stable group of shareholders. Despite the intuitive conclusion that hedge funds should have little or no interest in acquiring a participation in a corporation whose control cannot be challenged and therefore the threat of a take-over is less plausible, this research shows that activist hedge funds are already operating in Italy since 2007; even more interestingly, through the elaboration of publicly available data to obtain a comprehensive data base of activist hedge funds operating in Italy as well as by tracking their investments and tactics through the analysis of public documents and market data, this paper shows that hedge funds' strategies towards companies with concentrated ownership are in many ways different than those followed in the U.S. system. On the one hand, activist hedge funds adapt their tactics in a way to take advantage of several voice powers among those provided to minority shareholders by the Italian corporate law and, above all, of the right to get a minority member elected in both the board of directors and the board of internal auditors of listed companies. On the other hand, however, this research shows that a large part of the activist hedge funds operating in Italy - all of them with a significant amount of money invested in major long-term shareholdings - have actually been quite either by failing to exercise the voting rights connected to their positions and thus to exert any influence on managers, or by supporting with their votes the controlling shareholder/s. In particular, some activists seem to be in a way to form strategic diplomatic alliances rather than to pursue more aggressive tactics, which supports the idea that a number of hedge funds are following an opportunistic acting passive strategy that may actually conceal a form of bad relational investing as a mean to obtain higher gains. Hence, if these early empirical evidences were confirmed by the investment strategies hedge funds will make in the future, their activism in Italian listed companies could hardly be deemed to benefit non-control shareholders generally.

The Salience of Stakeholders and Their Attributes in Public Relations and Business News

Stakeholder theory contends that organizations owe an obligation to other stakeholder groups that extends beyond shareholders. This study uses stakeholder theory to examine which groups public relations practitioners and journalists attend to as well as which attributes—legitimacy, power, and urgency—they highlight. Content analysis of press releases and news stories found that the stakeholder most frequently mentioned in both press releases and newspapers was the shareholder group. Both press releases and news stories focused more on legitimacy than power or urgency for all stakeholders except government. The findings support criticisms that, in general, business news and corporate communications concentrate on the interests of shareholders. The ethical implications from the perspective of stakeholder theory are discussed.

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At the outbreak of World War I Reuters was a public company with a widely dispersed and large group of shareholders, including shareholders in Germany. Under the pressure of wartime conditions, the British government determined that, for security reasons, it needed to find a mechanism to achieve greater control of the company and the news it distributed. Censorship laws were, on their own, deemed inadequate to this purpose. In the event, the public company, Reuters Telegram Company, was liquidated following a generous buyout offer to shareholders. It was replaced by a private company, Reuters (1916) Limited. Under secret arrangements, this company was structured so as to enable effective British government control of its operations. This paper examines the relationship between Reuters and the British government via an analysis of archival materials held in the British National Archives and the Reuters Company Archives.

Shareholder Mobility in Five European Countries

This paper provides new evidence on the evolution of ownership of a large sample of companies in five European countries - Belgium, France, Italy, Spain and the UK - between 1999 and 2008 to understand ownership dynamics and the influence of legal developments on ownership patterns. Ownership concentration decreased at a moderate pace over the last 8 years in three countries - France, Italy and Belgium - but increased in two others, Spain and the UK. In France, Italy and Belgium approximately half of the companies have a de jure controlling shareholder. In Spain and the UK the largest group of companies have a shareholder with a voting block between 10% and 30%. In all civil law countries in this study, the majority of the largest shareholders are families or non-financial companies. However there are large differences between the civil law countries as well as over time. Banks remained major shareholders in a large number of Spanish companies and acquired smaller blocks in British companies. All over Europe, there is evidence that insurance companies acquire large stakes, though not controlling voting blocks. In France and Italy privatisation processes continue and the number of companies with government shareholdership is reduced. In all countries more companies are confronted with foreign shareholders. Foreign shareholders are the largest group of shareholders, measured by the number of companies in which a shareholder class is present in all countries, with Spain as the only exception. The analysis of ownership structures enables a more detailed analysis of its relationship with company and securities law. Lele and Siems (2008) developed the LLSV's index of investor protection rights in two indices relating to the protection against board and management on the one hand and protection against other shareholders on the other hand. Their analysis is used to study the relationship between company and securities law development and ownership structures. The results by and large confirm LLSV's thesis, especially for France, though the relationships are relatively weak. The increase of the anti-director index resulted in smaller voting blocks in hands of the largest shareholder. As the anti-blockholder index did not improve in France, (other minority)shareholders increased their voting blocks as a second best substitute.

Principal—Principal Conflict in the Governance of the Chinese Public Corporation

By examining the level of ownership concentration across firms, we determine how principal–principal conflict, defined as the incongruence of ownership goals among shareholder groups in a corporation, impacts agency costs of Chinese boards of directors. Based on data from Chinese companies listed on the Shanghai and Shenzhen stock exchanges during 1999-2003, we found that ownership concentration had a U-shaped relationship with board compensation, board size and the presence of independent directors. These results provide corroborating evidence that principal-principal conflict can lead to high agency costs.

<i>Rossiisko–amerikanskaia kompaniia: deiatel’nost’ na otechestvennom i zarubezhnom rynkakh (1799–1867). [Russian–American Company: Activity in the Home and Foreign Markets (1799–1867)]</i> (review)

Rossiisko-amerikanskaia kompaniia: deiatel'nost' na otechestvennom i zarubezhnom rynkakh (1799-1867). [Russian-American Company: Activity in the Home and Foreign Markets (1799-1867)] By A. Iu. Petrov. (Moscow: Russian Academy of Sciences, 2006. Pp. 315. Illustrations. Charts. Paper, 176.00 rubles.)Reviewed by Lucien J, FraryThe daring expeditions of the Danish-born Russian, Captain Vitus J. Bering, to the coasts of Alaska and other unknown lands in 1728-29 and 1741, marked the beginning of Russia's century-long presence in North America. During the era of the early republic, the RussianAmerican Company (RAC) became the principal instrument for tsarist commercial and colonial enterprise. Based on materials in the Manuscript Division of the Library of Congress; the National Archives in Washington, D.C.; the Archive of Imperial Russian Foreign Policy; and a wide array of regional and personal archives in the United States, Russia, and Estonia, A. Iu. Petrov's Russian-American Company is a prime example of the recent efforts by Russian scholars to contribute to the study of Alaska and the Pacific Northwest.Like most incarnations of former doctoral kandidat dissertations, Petrov's book begins with a lengthy appraisal (7-42) of the archives and historiography. Focused primarily on economic issues, the book's core analyzes the RAC's contracts, commerce, and finances from the period of the first charter (1799-1821) to the last (1841-67). Petrov complements and mildly revises the classic study by Semen B. Okun, Russian-American Company (Moscow: State Socio-Economie Press, 1939/trans. 1951).Founded with imperial sanction under the leadership of the merchantexplorers Grigorn I. Shelikhov and Nikolai P. Rezanov, the RAC monopolized exploration and exploitation of resources in Alaska, the Aleutian Islands, and the Pacific Northwest. The promotion of trade, the establishment of permanent settlements, and the spread of Eastern Orthodoxy in these vast and often dangerous territories ranked high among the RAC's multifarious responsibilities. In what was initially a risky business, the first ruler of Russian America, RAC's Alexandr A. Baranov, adroitly transformed posts on Kodiak Island, Sitka Island, and Fort Ross (north of San Francisco) into thriving fur markets.The War of 1812 marked a turning point, as Russian ships benefited from the blockade of American merchant vessels by British warships. Stock values and profits soared until 1821, when a government decree forbidding foreign ships from sailing within Russian territorial waters proved impossible to enforce. The RAC faced serious problems for the next few years, until personnel changes, conservation measures, and efforts at gaining firmer access to Chinese markets proved relatively successful. Recovery followed, and the RAC grew hundreds of thousands of rubles in value, in part due to a series of ambitious round-the-world expeditions. Although RAC was financially poised to expand further, the strong hand of the imperial family jealously limited the number of investors. The thorough reconstruction of the relatively small group of shareholders is a unique feature of Petrov's book (129-45).Although the RAC reached the high point of its economic activity during the middle decades of the century, the populations of seals, sea lions, otters, and other fur-bearing animals decreased significantly. …

Retirement: A Dance to the Music of Time

It's a beautiful afternoon in southern California, the Mediterranean light is making cliched picture postcards of the view over the Pacific, I don't have to work for a living (notice how I sidestep the hated and feared R word, but more of that later), and my time is my own, so why am I ruining the afternoon by sitting at a keyboard to write? I'm ashamed to say the real reason I'm doing it is because work; but for someone like me, work isn't work, fun. For me, work always has strong elements of danger: Can I get away with it this time? Do I still have my chops? Have I finally lost it? Can I be dropped on my head into the jungle with only a compass (maybe not even a compass) and find my way home? In the case of the work that's involved in writing these pages, I need to tell you the story of why I stopped being the president and CEO of a $3 billion newspaper and television company and how it feels to be an unemployed bum. To make that story effective, I must get stuff out of my head into yours so you'll see it through my eyes, feel what I feel. If you think that's easy, you don't know how awful most writing for newspapers and TV really is! I once saw a famous Russian ballet dancer interviewed, and she said of how she did what she did, eeet whorts. Of course it hurts to beat up ligaments and tendons that never were meant to do a pas de deux, but that's what you do if you want to be good. Likewise, a pain to get these few words to dance for you, so what kind of nut would volunteer to do it? Me. That kind of nut. The danger and pain of work is what I miss the most in my life today as an emeritus (you've noticed how I still won't use that R word). My wife is an important part of this story, that wife who hung around waiting and waiting for me to hang it up at the canonical age of 65, which, if the social security gurus are to be believed, ought now to be at least 67, and going up. I'll never forget two conversations of that 65th year. One was at 37,000 feet and in the cabin of an international flight. Looking down on Iceland has its limitations, as it does I'll bet for the Icelanders, so my seatmate and I struck up one of those airlineintimate conversations. He had retired from running his company some years before and regretted every moment of that decision and what came after. Fixing me with his watery gaze and pointing a long, bony, age-spotted finger, he said You'll be a damned fool to do it, don't make the mistake I did. The other conversation was with our tax preparer. In case you think that people who put on a latex glove to examine your nether regions have the goods on you, they are nothing compared to those who know your Form 1040. Robert the Accountant said You haven't needed to work for years, so you must be doing it for reasons other than money. Until those two conversations, I didn't know how to say to Sally, my wife, that I thought I ought to put this not-working stuff off for a while. Before I knew it (but of course not before she knew it), I was almost 70 and completing my 14th year as the head of one of the company's divisions. There was no question in anybody's mind that this would be my last job, and it was way overtime for me to leave it. My 70th birthday happens to be in July (a classic type A Leo) and I figured that at the end of the year, that would be it. Six weeks later they fired the parent company's president and CEO and asked me to take over the job. It was the best set of electric trains a small boy could have. Everything was in a mess. There was a threatened lawsuit from a group of dissident shareholders, earnings were off, the whole dismal recipe. Did I say I loved the element of danger? Maybe not this dangerous. Later, three and a half years into my tenure as CEO, earnings had risen by double digit percents, the lawsuit and the dissidents had both gone away, and peace reigned again. Could it get any better? I loved every minute, but one day I found myself saying to the board of directors, it's time. …

Sarbanes-Oxley and the New Corporate Governance in the United States

Berle and Means introduced the nearly eighty years ago in their classic text, The Modern Corporation and Private Property. They argued that control of the corporation in the United States had already shifted from large shareholder groups (founding families and financial capitalists) to professional, non-shareholding managers. We propose to re-evaluate the managerial thesis by arguing that economic forces and regulatory initiatives have shifted corporate control from focal firm managerial teams to independent outside directors. Today, director control remains intact, despite financial market concentration, institutional investor savvy, and regulatory reforms. However, director demographics have changed fundamentally. Independent, non-management directors, recruited disproportionately from the ranks of active and retired CEOs, have displaced inside-directors as the dominant group.

Sticks and stones: shareholder activists in the public forum

PurposeThis paper discusses shareholder activists in the public forum.Design/methodology/approachThis as a viewpoint paper in which the authors discuss the roles played by shareholder activists in the public forum.FindingsThere are a variety of responses that companies may take in response to activism.Originality/valueThe authors present some strategies for dealing with shareholder activists and shareholder groups.

What are the Costs of Conflicts between Controlling and Minority Shareholders in a Concentrated Ownership Environment?

The main agency conflict in concentrated ownership environments occurs between controlling and minority shareholders. We investigate the impact on share prices when news released on the specialized media indicates that the interests of these groups diverge. Specifically, we analyze 24 announcements of conflicts between shareholder groups in Brazil using two different event study methodologies. The results strongly support our hypothesis that such news constitutes an evidence of relevant agency costs taking place, leading to a higher perception of risk and reduced share prices. We find a strong negative stock price reaction to the announcement of such conflicts, with cumulative abnormal returns of around 12% for the 15 days surrounding the event date. Besides, this negative impact do not seems to be transitory, since there is no post-event positive drift. Overall, the results reinforce the importance of the adoption of good corporate governance practices in order to avoid corporate value destruction due to problems between shareholder groups.

Is underpricing a deliberate choice? Evidence from Germany

This study tests whether underpricing is subject to the controlling shareholder group's discretion in a sample of German IPOs from 1997 to 2002. This question is important since previous researchers (Allen and Faulhaber (1989), Welch (1998), Grinblatt and Hwang (1989), Brennan and Franks (1997) and others) have relied on the assumption that underpricing is a deliberate choice. Regression results indicate that control by insiders has a positive impact on underpricing. Additionally, if insiders are in control, the relative marginal costs of underpricing that are borne by them have a negative impact on the extent of underpricing. In contrast, for outside block holders, no significant relation exists. This paper introduces the issuer's insurance hypothesis as a potential explanation for this result. These findings are robust to a 3SLS estimation of underpricing and relative marginal cost of underpricing, and are also robust to different definitions of control. Furthermore, underpricing has a simultaneous negative impact on the marginal cost of underpricing at the IPO, suggesting that insiders adapt to an expected level of underpricing. Overall, the results indicate that insiders are trading off the extent of underpricing with its potential costs, which implies that underpricing is a deliberate choice and that ownership and control issues matter for the extent of underpricing.

Josephine Alice Coreen Weatherall (née Ogston)

Born on 19 May 1922 in Kingston upon Thames, the fifth of six children, Jo Ogston studied medicine at the University of Edinburgh from 1939 to 1945. Several placements before...

Shaping exit and voice: an account of corporate control in UK sports

PurposeThe purpose of this paper is to help demonstrate the extent to which socio‐cultural and market‐oriented incentives jointly contribute to corporate control outcomes that prevail in the UK football industry.Design/methodology/approachIllustrative case studies informed by analysis of financial performance data, discussion with key informants, review of official documents.FindingsThe paper finds long term performance outcomes were influenced in substantive ways by actions led by shareholder groups pursuing largely non‐market‐oriented objectives.Research limitations/implicationsIndustry‐specific empirical work that analyses how the interplay between voice and exit strategies influences corporate control outcomes is limited. This paper focuses on two UK cases and therefore would benefit expansion to further UK cases and comparative analyses to non‐UK situations.Practical implicationsThe outcomes suggest that the market for corporate control in this particular industry context requires specific attention to actions driven by largely non‐market‐driven incentives.Originality/valuePrevious papers have not provided detailed empirical‐based evidence about how socio‐cultural concerns have influenced corporate control outcomes in the case studies provided.

Corporate Ownership Structure and Firm Performance: evidence from Greek firms

The Berle‐Means thesis (1932 The Modern Corporation and Private Property. New York: Harcourt, Brace and World) implies that diffuse ownership adversely affects firm performance. This paper tries to investigate whether there is strong evidence to support the notion that variations across firms in observed ownership structures result in systematic variations in observed firm performance. We test this hypothesis by assessing the impact of the structure of ownership on corporate performance, measured by profitability, using data for 175 Greek listed firms. Following Demsetz and Villalonga (2001 Ownership Structure and Corporate Performance, Journal of Corporate Finance, 7, 209–233), we model ownership structure, first, as an endogenous variable and, second, we consider two different measures of ownership structure reflecting different groups of shareholders with conflicting interests. Empirical findings suggest that a more concentrated ownership structure positively relates to higher firm profitability. We also find that higher firm profitability requires a less diffused ownership.

Accounting for the Buyback Boom - The Next Step for Options and Equity Expensing

Stock boomed in the first years of the 21st century even while their returns trended towards 0%. Unlike dividends, which can never be mispriced and treat all shareholders equally, can be good (when shares are underpriced) or bad (when shares are overpriced) and may systematically favor one group of shareholders over another. Bad buybacks are now estimated to generate over $10 billion annually in excess costs borne largely by public (non-management) shareholders. Various works have identified options as a stimulant to the use (and misuse) of buybacks. This essay goes the additional step of suggesting that equity accounting has accelerated the boom. Whether options should be expensed was extensively debated before SFAS 123R was adopted in 2004, and focus then shifted to the merits of competing valuation models. But, in all the sound and fury, either exhausted by the initial debate or mesmerized by the subsequent models, accounting authorities neglected to rest the mechanism for option expense recognition on the most elemental foundation: The actual value of an option grant. Eventually, an option is worth something or nothing. However, in a practice peculiar to option compensation recognition, estimated and actual expense remain unreconciled. Though submitted to the IRS for a tax credit, the expense otherwise is neither recorded nor reported. Other equity transactions, most notably stock buybacks, are unique in being excluded from income reports. Opposition to accounting changes may be intense, but correctly recording and reporting equity transactions would likely encourage dividend payouts and return stock to a more appropriate role as a tool to capitalize on undervaluation. Accounting for options is so off base that a change in policy seems reasonably likely within a relatively short time (more than two years, less than a decade). The timeframe for a review of equity accounting for may be longer since buyback accounting does not currently appear to be a subject of great interest.

The US Securities and Exchange Commission and shareholder director nominations: paving the way for special interest directors?

The US Securities and Exchange Commission recently proposed rules relating to shareholder (independent) director nominations to publicly-traded companies. While shareholder groups, such as institutional investors, consumer groups, and shareholder activists, generally support the proxy reform, the business community, including The Business Roundtable and the US Chamber of Commerce, are critical of the proposal, arguing that it will 'open the door' to special interest directors, e.g., labour unions or other groups having a social or political agenda contrary to the economic interests of the shareholder owners of the corporation. An analysis of the proposed rules, however, show that the mechanisms offered to nominate and elect independent directors offer little or no threat of any shareholder group placing special interest directors on the board of a publicly-traded company in the USA. The article concludes with a recommended managerial course of action for executives and boards to follow in the unlikely event that shareholders are seriously threatening to place a special interest director(s) on the proxy ballot.

Conflicts of Interests Among Shareholders: The Case of Corporate Acquisitions

We identify important conflicts of interests among shareholders and examine their effects on corporate decisions. When a firm is considering an action that affects other firms in its shareholders' portfolios, shareholders with heterogeneous portfolios may disagree about whether to proceed. This effect is measurable and potentially large in the case of corporate acquisitions, where bidder shareholders with holdings in the target want management to maximize a weighted average of both firms' equity values. Empirically, we show that such cross-holdings are large for a significant group of institutional shareholders in the average acquisition and for a majority of institutional shareholders in a significant number of deals. We find evidence that managers consider cross-holdings when identifying potential targets and that they trade off cross-holdings with synergies when selecting them. Overall, we conclude that conflicts of interests among shareholders are sizeable and, at least in the case of acquisitions, affect managerial decisions.

Employee financial participation: evidence from a major UK retailer

PurposeThe bulk of research on approved profit sharing and SAYE schemes tends to focus on the effects of their presence/absence, which says little about how effectively such initiatives are implemented, particularly with regard to different categories of employee. This paper seeks to contribute towards filling that gap through comparing responses between different categories of employee, and the relative effects of differing forms of financial participation.Design/methodology/approachThe paper shows that the population for the study consisted of employees in a large (153,000 employees) retail organisation in the UK. A stratified proportionate random sampling procedure was adopted to include employees at the managerial/non‐managerial levels and in shareholder/non‐shareholder groups. A total of 1,000 questionnaires were mailed to a broad spectrum of employees and a total of 430 usable returns were received. The survey results were analysed using regression analysis.FindingsThe paper found that more junior employees are less likely to choose to actively buy into profit sharing and share ownership schemes; among workers in the lower job bands, the rewards accruing from participation in such schemes are likely to be the least, yet it is there that the effects of any undermining of collective solidarities are likely to be particularly pronounced.Research limitations/implicationsThe paper shows, while based on the case of a single large enterprise, this case study highlights something of the contradictions and limitations of flexible reward systems.Originality/valueThe paper highlights the divergent effects of individualized forms of participation. On the one hand, financial participation lengthens the reward cycle; employees will be encouraged to remain with the firm, to maximise their shareholdings. On the other hand, a greater individualisation of reward systems will undermine notions of collective solidarity; workers will have different agendas according to individual choices made regarding the scale of participation in such schemes. This central contradiction will be particularly pronounced among workers in the lower job bands, where the rewards accruing from participation in such schemes is likely to be the least, yet it is there that the effects of any undermining of collective solidarities is likely to be particularly pronounced.

Discussion of Board Share‐Ownership and Takeover Performance

It has long been suggested that one of the principal motivations for takeovers is for shareholder principles to exert control over managerial agents by encouraging the removal of underperforming directors through takeover. Outside shareholders can also try to align interests by encouraging high levels of equity ownership by the directors. With takeover waves during the 1980s and 1990s, and every sign that another sizeable increase in activity is upon us, the Cosh, Guest and Hughes (CGH) (2006) paper is timely. They seek to position the paper in terms of corporate governance issues and investigate acquiring company shareholder and accounting performance for different levels of board and CEO ownership. Essentially, the authors are testing whether board, CEO and outside shareholder wealth creation interests are aligned, so that greater levels of board and CEO share-ownership provide superior corporate performance, and, secondly, if there is a board and CEO ownership point at which improvements cease or diminish as boards and CEOs seek to satisfy other non-shareholder wealth benefits for themselves. The literature is well stocked with theoretical and empirical contributions to this debate within the takeover arena and more generally. Unfortunately, the results in most of the empirical studies are inconsistent. CGH cite seven US studies between 1968 and 1981 which find insignificant shareholder performance differences between high board shareholder and low board shareholder groups. In studies which do find a relationship between board ownership and performance, some studies find one turning point and others two. Often, the turning points are at different levels of board ownership. The US findings are echoed in UK studies and in studies which look specifically at ownership, takeovers and performance. CGH summarise that ‘these [studies] provide mixed evidence in identifying significant ownership impacts.’ So, two worrying possibilities emerge from this. First, the multitude of conflicting results may have led to theory development which suggests alignment and entrenchment to explain an empirical phenomenon which is only found in a minority of studies. Second, the mixed evidence suggests