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Author: Henry Hansmann
Publisher:
ISBN:
Category :
Languages : en
Pages : 50
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Book Description
Despite the extensive attention paid to corporate governance in the literature of both law and economics in recent years, empirical work to date has largely failed to establish a link between formal governance structures and economic performance. In this paper, we explore the relationship between corporate governance structures and economic performance in a setting that is, in important respects, more favorable than the publicly-traded U.S. business corporations that are the typical focus of previous research. We work with a rich data set comprising 121 Danish industrial foundations, which are industrial companies controlled by autonomous nonprofit foundations. These industrial foundations have several important advantages as subjects of study. First, by conventional measures, the industrial companies perform, on average, as efficiently as their investor-owned counterparts - a remarkable fact, given their ownership structure. Second, because the management of the companies is ultimately in the hands of a self-perpetuating board of directors that is free of control by outside owners, the impact of the firm's internal governance structure on managerial decision-making, and hence on company performance, should be both more intense and more easily isolated than in conventional investor-owned firms. Third, the industrial foundations display broader variance in internal governance structures than do U.S. business corporations.We focus in particular on a composite structural factor we term “managerial distance.” We interpret this as a measure of the clarity and objectivity with which a firm's top managers are induced to focus on the operating company's profitability. More particularly, managerial distance seems best interpreted as a factor, or aggregate of component factors, that put the firm's top managers in the position of “virtual owners,” in the sense that the information and decisions facing the managers are framed for them in roughly the way they would be framed for true owners of the firm. Our empirical analysis shows a positive, significant, and robust association between managerial distance and company economic performance. The findings appear to illuminate not just foundation governance, but corporate governance more generally.
Author: Henry Hansmann
Publisher:
ISBN:
Category :
Languages : en
Pages : 50
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Book Description
Despite the extensive attention paid to corporate governance in the literature of both law and economics in recent years, empirical work to date has largely failed to establish a link between formal governance structures and economic performance. In this paper, we explore the relationship between corporate governance structures and economic performance in a setting that is, in important respects, more favorable than the publicly-traded U.S. business corporations that are the typical focus of previous research. We work with a rich data set comprising 121 Danish industrial foundations, which are industrial companies controlled by autonomous nonprofit foundations. These industrial foundations have several important advantages as subjects of study. First, by conventional measures, the industrial companies perform, on average, as efficiently as their investor-owned counterparts - a remarkable fact, given their ownership structure. Second, because the management of the companies is ultimately in the hands of a self-perpetuating board of directors that is free of control by outside owners, the impact of the firm's internal governance structure on managerial decision-making, and hence on company performance, should be both more intense and more easily isolated than in conventional investor-owned firms. Third, the industrial foundations display broader variance in internal governance structures than do U.S. business corporations.We focus in particular on a composite structural factor we term “managerial distance.” We interpret this as a measure of the clarity and objectivity with which a firm's top managers are induced to focus on the operating company's profitability. More particularly, managerial distance seems best interpreted as a factor, or aggregate of component factors, that put the firm's top managers in the position of “virtual owners,” in the sense that the information and decisions facing the managers are framed for them in roughly the way they would be framed for true owners of the firm. Our empirical analysis shows a positive, significant, and robust association between managerial distance and company economic performance. The findings appear to illuminate not just foundation governance, but corporate governance more generally.
Author: Henry Hansmann
Publisher:
ISBN:
Category :
Languages : en
Pages :
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Book Description
Industrial foundations are autonomous nonprofit entities that own and control one or more conventional business firms. These foundations are common in Northern Europe, where they own a number of internationally prominent companies. Previous studies have indicated, surprisingly, that companies controlled by industrial foundations are, on average, as profitable as companies with conventional patterns of investor ownership. In this article, we explore the reasons for this performance, not by comparing foundation-owned firms with conventional investor-owned firms, but rather by focusing on differences among the industrial foundations themselves. We work with a rich data set comprising 113 foundation-owned Danish companies over the period 2003-2008.We focus in particular on a composite structural factor that we term “managerial distance.” We propose this as a measure of the extent to which a foundation establishes an identity that is distinct from that of the company it owns. More particularly, we hypothesize that, within limits, greater managerial distance increases the intensity, clarity, and objectivity with which the foundation's board of directors - which holds ultimate control of a foundation-owned company -- focuses on the company's profitability. In effect, a substantial degree of distance puts members of the foundation board in the position of “virtual owners,” in the sense that information and decisions are framed for the board in roughly the way they would be framed for profit-seeking outside owners of the company. Consistent with this hypothesis, our empirical analysis shows a positive, significant, and robust association between managerial distance and the economic performance of foundation owned companies. The findings appear to illuminate not just foundation governance, but corporate governance and fiduciary behavior more generally.
Author: Florian Hosseini-Görge
Publisher:
ISBN:
Category : Business enterprises
Languages : en
Pages :
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Book Description
Author: Steen Thomsen
Publisher: Djoef Publishing
ISBN: 9788757436891
Category : Charitable uses, trusts, and foundations
Languages : en
Pages : 209
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Book Description
Industrial foundations are foundations that own companies. Typically, they combine charitable and business goals. Some global companies such as IKEA, Robert Bosch or the Tata Group are foundation-owned, but nowhere are they as numerous as in Denmark. Three of the four largest Danish companies - the pharma company Novo Nordisk, the shipping company A.P. Moller-Maersk, and the Carlsberg brewery - are all foundation-owned. Surprisingly, very little has been written about what industrial foundations are, and how they operate. The Danish Industrial Foundations provides a comprehensive overview. The book covers aspects such as theory, law, taxation, economic importance, company performance, governance and philanthropy. The book is the result of a large collaborative research project, led by the author, on industrial foundations. [Subject: Business, Economics, Industrial Foundations]
Author: Steen Thomsen
Publisher:
ISBN:
Category :
Languages : en
Pages : 31
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Book Description
A number of world class companies - such as the Tata Group, Robert Bosch, and Bertelsmann -- are majority owned by charitable nonprofit foundations. This structure places control of the company in the hands of a self-perpetuating foundation board that is immune to outside discipline through a proxy fight or hostile acquisition, and whose members receive no incentive compensation. Conventional economic theories of corporate governance predict that such companies would be riven with agency costs and therefore highly inefficient. Yet previous studies find that companies owned by industrial foundations seem to perform as well as more conventional investor-owned companies. In this paper we reassess the relative performance of foundation-owned companies by comparing a substantial sample of them from the Nordic countries with various different samples of investor-owned Nordic companies, including matched pairs of companies in the same industry and of comparable size. We find that, overall, foundation-owned companies have similar accounting profitability, take less risk, and grow more slowly than listed investor-owned companies. We offer alternative theories regarding the costs and benefits of foundation ownership that appear consistent with our results.
Author: Giacomo Boesso
Publisher: Springer
ISBN: 3030163571
Category : Political Science
Languages : en
Pages : 158
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Book Description
This book discusses the role of grant-making foundations in supporting local communities, and how effective governance can contribute to greater success of the social projects they finance. The book considers the extent to which granting foundations act as social investment banks or strategic philanthropists, and identifies possible areas of evolution and improvement in the granting process of foundations similar to other innovative firms. It seeks to explore the possibility of foundations becoming a reference point in the Third Sector for innovativeness and risk taking.
Author: Matthias Draheim
Publisher:
ISBN:
Category :
Languages : en
Pages : 50
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Book Description
How do policy and performance of firms change with variations in the stakeholder approach? We compare foundation owned firms (FoFs) and family firms, with and without codetermination. As foundations have no owners, the impact on corporate governance of residual claimants might be weaker and the impact of other stakeholders stronger. We find that German foundation owned firms are more labor intensive relative to matching firms. But their wages and their hiring and firing policy are about the same. Their financing policy is more conservative. Their financial performance is slightly weaker. Apart from financing policy, codetermination has similar effects. These findings indicate a stronger impact on corporate governance of employees in FoFs, combined with long-term orientation.
Author: Matthias Draheim
Publisher:
ISBN:
Category :
Languages : en
Pages : 51
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Book Description
This paper analyzes the governance and performance of firms which, according to simplistic agency theory, should not be viable. These firms are fully or partially owned by a foundation which itself is not owned by natural or legal persons. Therefore, residual claimholders have restricted or no influence on corporate governance. The lack of owners strengthens other stakeholders, in particular employees. Relative to matching family firms, German foundation owned firms are larger in terms of employees and operating revenue, and substitute labor for material, but not for capital. Their hiring and firing policy is about the same. They follow a more conservative financing policy, their financial performance is somewhat weaker.
Author: Steen Thomsen
Publisher:
ISBN: 9781680839425
Category :
Languages : en
Pages :
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Book Description
Enterprise Foundations: Law, Taxation, Governance, and Performance reviews the emerging literature on enterprise foundations. After an introduction, the authors begin by defining an enterprise foundation and its essential characteristics (Section 2). The monograph then discusses relevant theoretical perspectives on foundation ownership including agency theory, contract failure, and game theory (Section 3). Sections 4 and 5 examine enterprise foundation law and tax law respectively. Section 6 reviews the financial and social performance of foundation-owned companies. Section 7 addresses enterprise foundation governance. Section 8 concludes with a summary of findings and some ideas for future research.
Author: A. Koeberle-Schmid
Publisher: Springer
ISBN: 113729390X
Category : Business & Economics
Languages : en
Pages : 286
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Book Description
Presents a comprehensive overview of governance in family enterprises including practical management knowledge in easy-to-use frameworks and interviews with renowned family enterprise owners and managers. Readers will benefit from the book's systematic approach and the opportunity to learn from the experience of other family enterprises.
