Modelling the objective function of managers in the presence of overlapping shareholding
Autor(a) principal: | |
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Data de Publicação: | 2023 |
Outros Autores: | , , |
Tipo de documento: | Artigo |
Idioma: | eng |
Título da fonte: | Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
Texto Completo: | http://hdl.handle.net/10400.14/39755 |
Resumo: | The objective function of managers in the presence of overlapping shareholding may differ from the traditional own-firm profit maximization, as they may internalize the externalities their strategies impose on other firms. The dominant formulation of the objective function in such cases has, however, been critiqued for yielding counter-intuitive profit weights when the ownership of non-overlapping shareholders is highly dispersed. In this paper, we examine this issue. First, we make use of a probabilistic voting model (in which shareholders vote to elect the manager) to microfound an alternative formulation of the objective function of managers, which solves the above-mentioned criticism. Second, we apply the two formulations to the set of S&P 500 firms. We show that ownership dispersion of non-overlapping shareholders is, in fact, a relevant empirical issue, which may induce an over-quantification of the profit weights computed from the dominant formulation, particularly under a proportional control assumption. |
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Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
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Modelling the objective function of managers in the presence of overlapping shareholdingManager objective functionOverlapping shareholdingOwnership dispersionProportional controlBanzhaf controlThe objective function of managers in the presence of overlapping shareholding may differ from the traditional own-firm profit maximization, as they may internalize the externalities their strategies impose on other firms. The dominant formulation of the objective function in such cases has, however, been critiqued for yielding counter-intuitive profit weights when the ownership of non-overlapping shareholders is highly dispersed. In this paper, we examine this issue. First, we make use of a probabilistic voting model (in which shareholders vote to elect the manager) to microfound an alternative formulation of the objective function of managers, which solves the above-mentioned criticism. Second, we apply the two formulations to the set of S&P 500 firms. We show that ownership dispersion of non-overlapping shareholders is, in fact, a relevant empirical issue, which may induce an over-quantification of the profit weights computed from the dominant formulation, particularly under a proportional control assumption.Veritati - Repositório Institucional da Universidade Católica PortuguesaBrito, DuarteElhauge, EinerRibeiro, RicardoVasconcelos, Helder2023-01-06T17:06:23Z20232023-01-01T00:00:00Zinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/articleapplication/pdfhttp://hdl.handle.net/10400.14/39755eng0167-718710.1016/j.ijindorg.2022.10290585145779120000918364400001info:eu-repo/semantics/openAccessreponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos)instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãoinstacron:RCAAP2023-07-12T17:45:18Zoai:repositorio.ucp.pt:10400.14/39755Portal AgregadorONGhttps://www.rcaap.pt/oai/openaireopendoar:71602024-03-19T18:32:32.715377Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informaçãofalse |
dc.title.none.fl_str_mv |
Modelling the objective function of managers in the presence of overlapping shareholding |
title |
Modelling the objective function of managers in the presence of overlapping shareholding |
spellingShingle |
Modelling the objective function of managers in the presence of overlapping shareholding Brito, Duarte Manager objective function Overlapping shareholding Ownership dispersion Proportional control Banzhaf control |
title_short |
Modelling the objective function of managers in the presence of overlapping shareholding |
title_full |
Modelling the objective function of managers in the presence of overlapping shareholding |
title_fullStr |
Modelling the objective function of managers in the presence of overlapping shareholding |
title_full_unstemmed |
Modelling the objective function of managers in the presence of overlapping shareholding |
title_sort |
Modelling the objective function of managers in the presence of overlapping shareholding |
author |
Brito, Duarte |
author_facet |
Brito, Duarte Elhauge, Einer Ribeiro, Ricardo Vasconcelos, Helder |
author_role |
author |
author2 |
Elhauge, Einer Ribeiro, Ricardo Vasconcelos, Helder |
author2_role |
author author author |
dc.contributor.none.fl_str_mv |
Veritati - Repositório Institucional da Universidade Católica Portuguesa |
dc.contributor.author.fl_str_mv |
Brito, Duarte Elhauge, Einer Ribeiro, Ricardo Vasconcelos, Helder |
dc.subject.por.fl_str_mv |
Manager objective function Overlapping shareholding Ownership dispersion Proportional control Banzhaf control |
topic |
Manager objective function Overlapping shareholding Ownership dispersion Proportional control Banzhaf control |
description |
The objective function of managers in the presence of overlapping shareholding may differ from the traditional own-firm profit maximization, as they may internalize the externalities their strategies impose on other firms. The dominant formulation of the objective function in such cases has, however, been critiqued for yielding counter-intuitive profit weights when the ownership of non-overlapping shareholders is highly dispersed. In this paper, we examine this issue. First, we make use of a probabilistic voting model (in which shareholders vote to elect the manager) to microfound an alternative formulation of the objective function of managers, which solves the above-mentioned criticism. Second, we apply the two formulations to the set of S&P 500 firms. We show that ownership dispersion of non-overlapping shareholders is, in fact, a relevant empirical issue, which may induce an over-quantification of the profit weights computed from the dominant formulation, particularly under a proportional control assumption. |
publishDate |
2023 |
dc.date.none.fl_str_mv |
2023-01-06T17:06:23Z 2023 2023-01-01T00:00:00Z |
dc.type.status.fl_str_mv |
info:eu-repo/semantics/publishedVersion |
dc.type.driver.fl_str_mv |
info:eu-repo/semantics/article |
format |
article |
status_str |
publishedVersion |
dc.identifier.uri.fl_str_mv |
http://hdl.handle.net/10400.14/39755 |
url |
http://hdl.handle.net/10400.14/39755 |
dc.language.iso.fl_str_mv |
eng |
language |
eng |
dc.relation.none.fl_str_mv |
0167-7187 10.1016/j.ijindorg.2022.102905 85145779120 000918364400001 |
dc.rights.driver.fl_str_mv |
info:eu-repo/semantics/openAccess |
eu_rights_str_mv |
openAccess |
dc.format.none.fl_str_mv |
application/pdf |
dc.source.none.fl_str_mv |
reponame:Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) instname:Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação instacron:RCAAP |
instname_str |
Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
instacron_str |
RCAAP |
institution |
RCAAP |
reponame_str |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
collection |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) |
repository.name.fl_str_mv |
Repositório Científico de Acesso Aberto de Portugal (Repositórios Cientìficos) - Agência para a Sociedade do Conhecimento (UMIC) - FCT - Sociedade da Informação |
repository.mail.fl_str_mv |
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1799132050386583552 |