![]() Scholarship has focused solely on the protection of minority shareholders, we show that it isĮqually important to pay heed to the rights of the controlling shareholders. Idiosyncratic vision against the minority’s need for protection. Traded firms with controlling shareholders should balance the controller’s need to secure her Protection and corporate law doctrine and policy. Our framework provides important insights for investor When the entrepreneur’s idiosyncratic vision is ultimately realized, the benefits will beĭistributed pro rata to all investors. ![]() Vision) rather than to dictate the pie’s distribution (consume private benefits). Our analysis shows thatĬontrolling shareholders hold a control block to increase the pie’s size (pursue idiosyncratic To theĬontrary, it creates value for controlling and minority shareholders alike. Inevitable conflict through different ownership structures, each with different allocations ofĬoncentrated ownership, therefore, should not be viewed as an unalloyed evil. Investors’ need for protection against agency costs. ![]() Our framework identifies a fundamental tradeoff, stemming from asymmetric information andĭifferences of opinion, between the entrepreneur’s pursuit of her idiosyncratic vision and Subjective value an entrepreneur attaches to her vision the entrepreneur’s idiosyncratic vision. Our core claim is that entrepreneurs value corporate control because itĪllows them to pursue their vision (i.e., any business strategy that the entrepreneur genuinelyīelieves will produce an above-market rate of return) in the manner they see fit. Shareholders as essentially opportunistic actors who seek to reap private benefits at the expense New light on corporate-ownership structures and challenging the prevailing model of controlling This Article offers a novel theory of corporate control.
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