The Separation of Ownership from Control and Firm Performance Evidence from UAE

Mohamed A. Moustafa (UAE University)

Journal of Economic and Administrative Sciences

ISSN: 1026-4116

Publication date: 1 December 2005

Abstract

The paper examines the effect of separation between ownership and control on firm performance through testing whether there is a significant difference between the performances of 24 owner‐controlled (OC) firms versus 25 manager‐controlled (MC) firms in UAE using the averages of the accounting data over the five years 2002‐1998.The empirical results reveal that the OC firms outperformed the MC ones and hence support the expectations of the managerial theory of the firm and the agency theory. The results may be explained by the passive behavior of the owners of the MC firms and/or the moral hazard and adverse selection behavior of their managers.

Keywords

Citation

Moustafa, M. (2005), "The Separation of Ownership from Control and Firm Performance Evidence from UAE", Journal of Economic and Administrative Sciences, Vol. 21 No. 2, pp. 35-51. https://doi.org/10.1108/10264116200500006

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Publisher

:

Emerald Group Publishing Limited

Copyright © 2005, Emerald Group Publishing Limited

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