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2002, p. 2742).
Corporate culture must be taken into account when analyzing the effects of concentrated ownership and investment. At Taiwanese firms there may be a greater sense of obligation between the corporate managers and employees, and thus more positive and less negative risk taking and risk avoidance. In the United States, at many firms there is a higher level of expectation of self-interest of managers in the pursuit of profit-making, most notably amongst executives that negotiate so-called 'golden parachutes' which allow them to receive a large amount of compensation after leaving the company, regardless of how well they perform, or if their performance is salutary for the corporation's long-term health.
Instead of focusing on the concentration of shares alone, a variety of factors should be analyzed when evaluating the desirability of the ownership structure. Corporate culture, whether the current leadership (or leadership's family) began the firm, and even the personality of the corporate leader can all impact company performance due to the individual's sense of investment in the success of the firm. For example, CEO overconfidence in the CEO's personal ability to predict the future can result in greater negative risk-taking and a loss of profits, regardless of whether the leader has a strong financial incentive in...
firm ownership and the smaller number of family owned and controlled firms, Yin-Hua's findings about the benefits of concentrated ownership should be viewed with caution. Concentrated ownership of the firm in the hands of the corporate management alone is not a guarantee of success or failure in any nation, although the general environment in which the firm operates must be understood to interpret who really does own the majority of the stock.
References
Claessens, Stijn, Simeon Djankov, Joseph P.H. Fan & Larry H.P. Lang. (2002, December).
Disentangling the incentive and entrenchment effects of large shareholdings.
The Journal of Finance. 57 (6). Retrieved September 22, 2010 at http://www.doingbusiness.org/documents/Disentangling.pdf
Malmendier, Ulrike & Geoffrey Tate. (2005). Does overconfidence affect corporate investment? CEO overconfidence measures revisited.
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