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Advisor(s)
Abstract(s)
The dominantformulationformodelingtheobjectivefunctionofmanagersofcompeting rms
withhorizontalshareholdinghasbeencritiquedforproducingtheresultthat,ifnon-horizontal
shareholdersarehighlydispersed,managerswouldmimictheinterestsofhorizontalsharehold-
ers eveniftheyownashareofthe rmthatdoesnotinducefullcontrol.Weshowthatthis
issuecanbeavoided(whilemaintainingtheremainingfeaturesofthedominantapproach)
withanalternativeformulationthatisderivedfromaprobabilisticvotingmodelthatassumes
shareholderswithhigher nancialstakeswilltakegreaterinterestinthemanagerialactions,
whichyieldstheresultthatmanagersmaximizeacontrol-weightedsumoftheshareholders
relativereturns.
Description
Keywords
Horizontal Shareholding Ownership Dispersion Manager Objective Function Proportional Control Banzhaf Control
Pedagogical Context
Citation
Brito, D., Elhauge, E., Ribeiro, R., Vasconcelos, H. (2018). Modeling horizontal shareholding with ownership dispersion. Working papers: Economics. N.º 1, 17 p.