Agency Problems at Dual‐Class Companies

A-Tier
Journal: Journal of Finance
Year: 2009
Volume: 64
Issue: 4
Pages: 1697-1727

Score contribution per author:

1.341 = (α=2.01 / 3 authors) × 2.0x A-tier

α: calibrated so average coauthorship-adjusted count equals average raw count

Abstract

Using a sample of U.S. dual‐class companies, we examine how divergence between insider voting and cash flow rights affects managerial extraction of private benefits of control. We find that as this divergence widens, corporate cash holdings are worth less to outside shareholders, CEOs receive higher compensation, managers make shareholder value‐destroying acquisitions more often, and capital expenditures contribute less to shareholder value. These findings support the agency hypothesis that managers with greater excess control rights over cash flow rights are more prone to pursue private benefits at shareholders’ expense, and help explain why firm value is decreasing in insider excess control rights.

Technical Details

RePEc Handle
repec:bla:jfinan:v:64:y:2009:i:4:p:1697-1727
Journal Field
Finance
Author Count
3
Added to Database
2026-01-25