Document Type

Article

Publication Date

6-22-2017

Abstract

The effect of disproportionate insider control on firm performance is ambiguous. Disproportionate control may enhance insiders’ ability to expropriate perquisites; on the other hand, it may provide stability of management and reduce short‐term market pressures. Using a hand‐collected sample of U.S. dual‐class firms, we find that disproportionate control is positively associated with accounting‐based performance, but negatively associated with Tobin's Q. These results are consistent with the incentives of entrenched insiders who are interested in profitability but less beholden to capital markets.

Comments

We thank participants at the American Accounting Association (AAA) 2016 Annual as well as the AAA 2016 Ohio region meeting for their helpful comments.

Citation/Publisher Attribution

Hettler, B., & Forst, A. (2017). Disproportionate insider control and firm performance. Accounting & Finance.

Publisher Statement

"This is the peer-reviewed version of the following article:

Hettler, B., & Forst, A. (2017). Disproportionate insider control and firm performance. Accounting & Finance.

which has been published in final form at https://doi.org/10.1111/acfi.12279. This article may be used for non-commercial purposes in accordance with Wiley Terms and Conditions for Use of Self-Archived Versions."

Available for download on Saturday, June 22, 2019

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