Ownership Structure
Ownership structure refers to the way a business is owned and organized, including the distribution of ownership among individuals or entities. It outlines the rights and responsibilities of owners, such as decision-making authority and profit distribution. Common ownership structures include sole proprietorships, partnerships, corporations, and limited liability companies, each with its own implications for liability, taxation, and governance.
5 Key excerpts on "Ownership Structure"
eBook - ePubRethinking Corporate Governance
The Law and Economics of Control Powers
- Alessio Pacces(Author)
- 2013(Publication Date)
- Routledge(Publisher)
...In those situations, the share ownership that the corporate controller is willing to maintain relative to outside shareholders will depend on how favorable the stock price is (taking the amount of idiosyncratic PBC into account). The share ownership that he has to maintain in order to keep firm control undisputed will depend instead on corporate law. When these two levels are incompatible, the efficient choice of Ownership Structure can be impaired. Most often, ownership will be more concentrated than desirable because the majority of corporate law systems are biased towards shareholder control of publicly held firms. But also the reverse outcome can occur (i.e., ownership more dispersed than desirable) when regulation of listed companies is biased towards managerial control. An optimal regulation of corporate governance should avoid both kinds of biases. In particular, corporate law should provide for alternative arrangements suitable for both shareholder control with different degrees of ownership concentration and managerial control featured with outright dispersed ownership, in order for the optimal Ownership Structure to be selected by publicly held companies. As we will see in the following chapters, not all of these arrangements are equally efficient. Some of them (for instance, dual class shares and anti-takeover provisions explicitly included in the corporate charter) must typically be implemented ex-ante, when equity funds are raised from outside investors, and therefore the resulting ownership and control structure is likely to be efficiently priced by the stock market...
eBook - ePubHostile Business and the Sovereign State
Privatized Governance, State Security and International Law
- Michael J. Strauss(Author)
- 2018(Publication Date)
- Routledge(Publisher)
...Ownership itself can take various forms, depending on factors such as a company’s legal structure (corporation, partnership, etc.), its activity, its size, its capital needs and its location. In the case of stock-issuing corporations, which are frequently the companies that participate in privatizations, ownership may be direct or indirect, it may be highly concentrated or spread among a large number of investors, it may be stable over the long term or subject to frequent change and it may or may not be transparent. When a corporation issues shares of stock to raise the capital it needs to operate or expand, the shares are assigned a financial value and the shareholders who obtain them become the company’s owners. Each shareholder has a voice in decisions regarding the company’s affairs, and each may receive benefits, such as periodic dividend payments, in return for having invested in the company. In some cases, all of the shares are held by a single individual or entity or by a closed group – a syndicate of investors, for example, or the company’s founders or employees – and the transfer of shares to others may be limited by restrictions set by the enterprise. Larger corporations with a greater need for capital may offer shares to the general public – essentially any investors willing to buy them – and these shares may be freely sold and bought on physical or electronic exchanges where their prices rise or fall in accordance with the supply and demand for them. Shares issued by the same company may vary. Standard shares that are known in different national systems as ordinary, common or equity shares give their holders a collection of rights and benefits associated with their role as owners. The company may also issue other types of shares that confer greater or fewer or different rights or benefits...
eBook - ePubThe Changing Face of Corporate Ownership
Do Institutional Owners Affect Firm Performance
- Michael J. Rubach(Author)
- 2013(Publication Date)
- Routledge(Publisher)
...CHAPTER 2 Institutional Ownership and Corporate Governance AT&T’s payment of a $5.2 million bonus to its CEO in a year the company barely breaks even is publicly criticized; the composition and structure of the boards of directors of Disney and Archer-Daniels-Midland are under attack; and K-Mart’s and Woolworth’s business strategies are questioned following poor earnings performances. In each of these instances, the attacks and pressures to change are coming from a source not previously perceived as a participant in corporate strategy and policy matters: the institutional owner. Fundamentally, where and how an organization operates and how its performance is measured are responsive to the will of its owners. The increasing presence of institutional owners is altering the Ownership Structure of firms, which may alter corporate strategies and policies. As ownership changes, how, where, and why firms compete may also change. 11 Corporate governance investigates the internal functioning of business corporations and how corporate strategies are determined. The central issues of corporate governance involve who controls the corporation, who makes the critical strategic decisions, who is responsible for those decisions, and who has claims against the revenues and assets of the firm. 12 An organization’s Ownership Structure, a major element of its corporate governance, often determines whether the firm is successful. Berle and Means were the foremost, if not the first, commentators to identify the corporate governance paradigm that recognizes a separation of ownership from control. 13 The Berle-Means paradigm is often referred to as “managerialism” and the period of its ascendancy is dubbed the “managerial era.” 14 In this paradigm, shareholders, although the owners of the corporation, typically do not control policy making or strategic decision making within the corporation. The management team is recognized as the group which controls corporate decision making...
eBook - ePubCorporate Governance, Ownership Structure and Firm Performance
Mediation Models and Dynamic Approaches
- Hoang N. Pham, Sardar M. N. Islam(Authors)
- 2022(Publication Date)
- Routledge(Publisher)
...F. & Jensen, M. C. 1983. Separation of ownership and control. Journal of Law and Economics, 26, 301–325. Ferreira, M. A. & Matos, P. 2008. The colors of investors’ money: The role of institutional investors around the world. Journal of Financial Economics, 88, 499–533. Firth, M. A. & Rui, O. M. 2012. Does one size fit all? A study of the simultaneous relations among ownership, corporate governance mechanisms, and the financial performance of firms in China. In : Boubaker, S., Nguyen, B. D. & Nguyen, D. K. (eds.) Corporate governance: Recent developments and new trends. Berlin Heidelberg: Springer-Verlag. Gordon, L. A., Loeb, M. P. & Tseng, C.-Y. 2009. Enterprise risk management and firm performance: A contingency perspective. Journal of Accounting and Public Policy, 28, 301–327. Guner, G. & Kursat, A. 2002. Equity Ownership Structure, risk taking, and performance. Emerging Markets, Finance & Trade, 38, 6. Hardaker, J. B., Huirne, R. B. M., Anderson, J. R., Ebooks Corporation, L. & International, C. A. B. 2004. Coping with risk in agriculture, Wallingford (U.K.): CABI Pub. Hermalin, B. E. & Weisbach, M. S. 2003. Boards of directors as an endogenously determined institution: A survey of the economic literature. Economic policy review, 9, 7–26. Himmelberg, C. P., Hubbard, R. G. & Palia, D. 1999. Understanding the determinants of managerial ownership and the link between ownership and performance. Journal of Financial Economics, 53, 353–384. Hu, Y. & Izumida, S. 2008. Ownership concentration and corporate performance: A causal analysis with Japanese panel data. Corporate Governance: An International Review, 16, 342–358. Jensen, M. C. & Meckling, W. H. 1976. Theory of the firm: Managerial behavior, agency costs and Ownership Structure. Journal of Financial Economics, 3, 305–360. John, K., Litov, L. & Yeung, B. 2008. Corporate governance and risk-taking. The Journal of Finance, 63, 1679–1728. Kim, B. 2011...
eBook - ePubThe Corporation
Growth, Diversification and Mergers
- Dennis Mueller(Author)
- 2020(Publication Date)
- Routledge(Publisher)
...6 Corporate governance In recent years, considerable attention has been devoted to differences across countries in the institutional environments in which corporations operate, and the consequences of these institutional differences for corporate performance. One branch of this literature has been concerned with corporate governance structures. 1 Under the broad heading of corporate governance are usually included (1) the identity and degree of concentration of ownership, (2) the institutional structure by which owners monitor and control managers by means of boards of directors and the like, and (3) the institutional structure for disciplining and replacing managers as, for example, through proxy contests and/or takeovers. A second branch of the literature focuses upon the broader legal environment in which corporations operate. Within this literature would come laws governing a shareholder’s access to various sorts of information about a company, a shareholder’s rights to sue the management for certain actions detrimental to the shareholder’s interests, and so on. 2 Although corporate governance structures are imbedded within the broader legal system of a country and thus are affected by it, the two sets of institutions are not synonymous, as we shall explain shortly. One distinction drawn within the corporate governance literature is between “insider” governance systems in which ownership stakes are concentrated and the major stakeholders are directly represented on the boards that monitor managers, and perhaps in management itself, and “outsider” governance systems in which ownership stakes are dispersed, and owners exercise indirect control on management by electing representatives to the monitoring boards, or perhaps by voting on specific proposals of management...
