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Performance Effects of Owner Identity and Diversification: An Agency-Theoretic Assessment

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abstract Recent research suggests that owners such as institutions, families, and corporations have distinct characteristics. While these differences seem to have implications for a firm’s corporate strategy and performance, empirical evidence is still sparse. We address this gap with a study of the combined effect of owner identity and diversification on firm performance. Drawing upon agency theory, we argue that owners differ in their incentives to monitor, costs of monitoring, and abilities to monitor a firm’s management and, therefore, prefer different diversification strategies. Further, we propose that the fit between owner identity and diversification strategy benefits firm performance. Results from a large-scale sample of 643 US firms over an eight-year period largely support our hypotheses.
   
type conference paper (English)
   
keywords Agency Theory, Ownership, Owner Identity, Diversification
   
name of conference SMS 31st Annual International Conference (Miami, FL)
date of conference 6-11-2011
title of proceedings Strategies for a Multi-Polar World
page(s) 29
publisher SMS Strategic Management Society (Chicago)
review double-blind review
   
citation Scheef, C., & Menz, M. (2011). Performance Effects of Owner Identity and Diversification: An Agency-Theoretic Assessment. In Strategies for a Multi-Polar World, pp.29. Chicago: SMS Strategic Management Society.