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The distribution of equity holdings, which relates to corporate control power, serves as a control mechanism to optimise the allocation of corporate resources. Therefore, through control power granted to a firm s equity holders, ownership affects productivity by influencing the company s financial policies and thus its performance. Equity owners use their voting power to limit selfish managerial behaviour patterns, which impacts on company performance. Regarding the influence of ownership on capital structure and performance, it is suggested that larger block-holders tend to monitor managers…mehr

Produktbeschreibung
The distribution of equity holdings, which relates to corporate control power, serves as a control mechanism to optimise the allocation of corporate resources. Therefore, through control power granted to a firm s equity holders, ownership affects productivity by influencing the company s financial policies and thus its performance. Equity owners use their voting power to limit selfish managerial behaviour patterns, which impacts on company performance. Regarding the influence of ownership on capital structure and performance, it is suggested that larger block-holders tend to monitor managers and, as a result, prevent them from making financial decisions that favour their own self interests, including decisions to adjust the corporate capital structure to suit their personal advancements. Reflecting on Jensen's Free Cashflows Hypothesis, dividends may also play a crucial role in preventing controlling shareholders from extracting personal benefits and, therefore, reducing possibleagency conflicts between minority and majority shareholders.
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Autorenporträt
Dr. Josephat Lotto is a lecturer at the Institute of Finance Management in Tanzania,East Africa. He holds a PhD in Finance. Josephat started his PhD project in Leeds University,UK from January 2009 and completed in the University of Strathclyde,UK in February 2012. His major writing and research areas are Corporate Governance and Corporate Finance.