Concentrated Ownership, Socioemotional Wealth, and the “Third Possibility”: Bringing Society Back in
The Corporation: Rethinking the Iconic Form of Business Organization
ISBN: 978-1-80043-377-9, eISBN: 978-1-80043-376-2
Publication date: 27 January 2022
Abstract
Concentrated ownership implies greater alignment between ownership and control, mitigating the agency problem. However, it may also engender governance challenges such as funds appropriation through related party transactions and the oppression of minority shareholders, especially in the context of weak legal systems. We draw from legal theory (the tradeoff controlling shareholder model and private benefits of control) and from organization theory (socioemotional wealth), to suggest that concentrated ownership can be beneficial in both robust and weak legal systems for different reasons. We advance theory on the effects of controlling shareholders and suggest that the longer-term outlook associated with engaged concentrated ownership can aid the shift of the corporation toward Berle and Means' (1932, p. 355) “third possibility” of corporations serving the interests of not just the stockholders or management but also of society.
Keywords
Citation
Heracleous, L. and Lan, L.L. (2022), "Concentrated Ownership, Socioemotional Wealth, and the “Third Possibility”: Bringing Society Back in", Meyer, R.E., Leixnering, S. and Veldman, J. (Ed.) The Corporation: Rethinking the Iconic Form of Business Organization (Research in the Sociology of Organizations, Vol. 78), Emerald Publishing Limited, Leeds, pp. 13-30. https://doi.org/10.1108/S0733-558X20220000078001
Publisher
:Emerald Publishing Limited
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