The directors of such companies, however, being the managers rather of other people's money than their own, it cannot well be expected that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own. Like the stewards of a rich man, they are apt to consider attention to small matters as not to their master's honour and very easily give themselves a dispensation for having it. Negligence and profusion, therefore, must always prevail, more or less, in the management of such a company. Adam Smith, Wealth of Nations, p. 7oo THE increasing separation of corporate ownership from managerial control has provided a fertile environment for theories regarding both executive conduct [i; I I; 12; I7] and corporate financial performance [4; 8; 9]. This paper addresses the general question raised by Adam Smith in the above quote as to whether 'Negligence and profusion. . .' is a consequence of the separation of ownership and control in firms. However, unlike previous studies that have examined the effect of owner-control versus managercontrol on overall performance (e.g. profit, growth), this paper examines a specific type of corporate behavior-merger pricing policies-in firms classified as owner-controlled or manager-controlled. Corporate mergers are analyzed for two reasons. First, corporate mergers represent a major part of economic decision-making by many firms and hence have important micro- and macroeconomic consequences. Assets acquired by merger, for example, equalled from 8 to 46 % of the newv annual assets created by gross private domestic investment during I966 to 1976 in the manufacturing and mining sectors.1 Second, the information on mergers by publicly traded firms is readily available. The SEC requires prompt and full disclosure on merger terms, including the merger price. The public assesses the terms of merger in the public announcement and ultimately reacts to the information in the securities market. Thus, merger pricing is one of the few individual pricing decisions that requires full disclosure, and hence, results in a specific reaction by the securities market.