Brito, DuarteElhauge, EinerRibeiro, RicardoVasconcelos, Helder2018-12-072018-12-072018Brito, D., Elhauge, E., Ribeiro, R., Vasconcelos, H. (2018). Modeling horizontal shareholding with ownership dispersion. Working papers: Economics. N.º 1, 17 p.http://hdl.handle.net/10400.14/26282The dominantformulationformodelingtheobjectivefunctionofmanagersofcompeting rms withhorizontalshareholdinghasbeencritiquedforproducingtheresultthat,ifnon-horizontal shareholdersarehighlydispersed,managerswouldmimictheinterestsofhorizontalsharehold- ers eveniftheyownashareofthe rmthatdoesnotinducefullcontrol.Weshowthatthis issuecanbeavoided(whilemaintainingtheremainingfeaturesofthedominantapproach) withanalternativeformulationthatisderivedfromaprobabilisticvotingmodelthatassumes shareholderswithhigher nancialstakeswilltakegreaterinterestinthemanagerialactions, whichyieldstheresultthatmanagersmaximizeacontrol-weightedsumoftheshareholders relativereturns.engHorizontal ShareholdingOwnership DispersionManager Objective FunctionProportional ControlBanzhaf Controlworking paper