Complementarities in Corporate Governance: Ownership Concentration, Capital Structure, Monitoring and Pecuniary Incentives

Arbeitspapier

The paper shows that, as owners accumulate larger stakes and hence become less risk-tolerant, their incentives to monitor management are attenuated because monitoring shifts some of the firm's risk from management to owners. This counterbalances the positive effect which more concentrated ownership has on monitoring via reduced free rider problems. Moreover, the paper shows how the opportunity cost of concentrated ownership, which is the loss of risk-sharing benefits, creates scope to use leverage as an additional complementary governance instrument. The paper offers new explanations for several empirical regularities found in the literature.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: Kiel Working Paper ; No. 968

Classification and Topics

• Classification: Wirtschaft ; Corporate Finance and Governance: General ; Organizational Behavior; Transaction Costs; Property Rights
• Subject: Corporate governance ; Complementarity ; Agency problem ; Corporate Governance ; Agency Theory ; Opportunitätskosten ; Anreizvertrag ; Kontrolle ; Eigentümerstruktur ; Kapitalstruktur ; Leistungsorientierte Vergütung ; Theorie ; Deutschland ; Japan ; Vereinigte Staaten

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Heinrich, Ralph P.
• Event: Veröffentlichung
• (who): Kiel Institute of World Economics (IfW)
• (where): Kiel
• (when): 2000

Further information

• Handle: http://hdl.handle.net/10419/17833
• Last update: 10.03.2025, 11:43 AM CET