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Journal of Management & Governance

, Volume 21, Issue 3, pp 561–572 | Cite as

The role and effect of controlling shareholders in corporate governance

  • Lucie Courteau
  • Roberto Di Pietra
  • Paolo Giudici
  • Andrea Melis
Article

Abstract

This paper examines two potentially contradictory effects of the presence of controlling shareholders. Controlling shareholders have been shown to be beneficial, as they generally have a long-term interest in the firm and are willing and able to monitor the actions of senior managers closely and decrease agency costs between shareholders and management (agency costs of Type I). However, they are also in a position to expropriate the firm’s assets, especially when they are actively involved in management (agency costs of Type II). More specifically, this article reviews how regulatory and legislative bodies have tried to curb the consumption of private benefits by controlling shareholders while preserving the beneficial aspects of their long-term interest and their monitoring role, the effect controlling shareholders on the application and effectiveness of corporate governance best practices as well as on the executive and board member remuneration.

Keywords

Corporate Governance Family Firm Agency Cost Private Equity Minority Shareholder 
These keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

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Copyright information

© Springer Science+Business Media New York 2016

Authors and Affiliations

  • Lucie Courteau
    • 1
  • Roberto Di Pietra
    • 2
  • Paolo Giudici
    • 1
  • Andrea Melis
    • 3
  1. 1.Free University of Bozen-BolzanoBolzanoItaly
  2. 2.University of SienaSienaItaly
  3. 3.University of CagliariCagliariItaly

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