Agency theory, proposed by previous studies such as Guidry, Leone, and Rock (1999) and Arya and Huey-Lian (2004), suggests that bonus and other accounting-metric-based compensation can motivate managers to perform well in the short horizon while equity-based compensation, such as restricted shares and stock options, can serve the purpose of aligning the long run interests of shareholders and managers. The empirical evidence, for example Jensen and Murphy (1990), Kaplan (1994), Hall and Liebman (1998), Murphy (1999), Zhou (2000), and Chowdhury and Wang (2009), confirms that incentive compensation is popular in many countries. However, recent studies suggest that the relation between performance and incentive compensation is weak. Shaw and Zhang (2010) find that CEO bonus compensation is less sensitive to poor earnings performance than it is to good earnings performance. Fahlenbrach and Stulz (2011) study the relation between bank performance during the 2008 bank crisis and the bonus and equity-based compensation of bank CEOs. They find that banks with CEOs whose incentives were better aligned with the interests of shareholders performed worse than other banks. This study examines whether ownership structure can explain the differences among compensation structures of chief executive officers (CEOs). In particular, we examine the compensation structure of three distinct groups: family-controlled, institution-controlled, and widely-held firms. We distinguish these three kinds of firms to represent different levels of market imperfection. Compared with family-controlled and institution-controlled firms, widely held firms have dispersed ownership. The most significant weakness of a widely-held ownership structure is the lack of shareholder monitoring due to the unmatched benefit and cost of monitoring for small shareholders. In contrast, a holder of a large block of shares will have the same monitoring costs but the benefits to this shareholder from monitoring management and reducing agency costs would be substantial and larger than the costs of monitoring. Thus the presence of a large shareholder will reduce the agency costs. In addition, large shareholders may be willing to spend time and effort continuously to collect more information on management performance or to estimate the firms investment projects. This behaviour will reduce the problems that arise from information asymmetry and will decrease the waste of free cash flows by managers. Both family-controlled firms and institution-controlled firms have large shareholders. However, whether or not the control shareholders are playing an active monitoring role is still an important issue. From the viewpoint of aligning the interests of managers and shareholders, the family-controlled group is superior to the institution-controlled group. First, institutions are more flexible in moving their ownership from one firm to another depending on performance. If the costs of monitoring are high in comparison to the costs of rebalancing portfolios, institutions will choose to rebalance instead of monitoring. In contrast, a family that controls a firm does not have this flexibility. Second, family-controlled firms generally assign influential positions to family members whose focus is in line with that of the family group. Even though a non family member may be appointed as the manager, the level of monitoring is significant given the high ownership concentration by the family. However, the level of monitoring by a family may not necessarily translate into a reduction of agency costs for minority shareholders. Indeed, previous studies suggest that significant family ownership may lead to agency costs of its own. The family may divert company resources for its own benefit despite the presence of a manager who may or may not be a family member. Essentially, the family and the manager can collude to spend on perks and personal benefits at the expense of minority shareholders. Chourou (2010) suggests that excessive compensation of chief executive officers at some family owned Canadian corporations may be viewed as expropriation of minority rights. Overall, the main objective of this study is to examine whether block-holder monitoring is a substitute to the incentive components of compensation. We propose that as we move from widely-held to institution-controlled the level of monitoring may or may not increase. However, as we move further into higher control, as may be suggested by family ownership, the level of monitoring will increase but this monitoring may not necessarily reduce agency costs. The results show that the institution-controlled firms pay significantly less bonus compensation per dollar of assets than widely-held firms but the differences in equity based compensation are not significant. In addition, the family-controlled corporations offer the lowest performance-based compensation, bonus per dollar of assets, in comparison to the institution-controlled and the widely-held groups. These results indicate that the family-controlled Canadian corporations rely more on monitoring managers than paying them incentive payments in the form of bonus payments. In addition, our results indicate that the institutions which control corporations may be monitoring the managers of these corporations but this monitoring does not significantly reduce the need for the long-term incentive components of compensation. This result suggests that institutions may monitor the short-term performance effectively but they may prefer rebalancing their portfolio rather than monitoring long term performance.

The focus of this thesis is to explore the influence of market power possessed by seed input companies on rent distribution in an identity preserved production and marketing system. This thesis develops a theoretical model to estimate rent distribution between participants in an identity preserved production and marketing system under constrained production and the elicitation of a premium from market development activities in the presence of a range of seed ownership structures. The thesis employs an empirical model to examine rent distribution of two varieties involved in the Canadian Wheat Boards Identity Preserved Contract Program.<p> The theoretical model demonstrates that market development activities for an identity preserved production and marketing program had a diminished impact on farmers when the seed industry possessed a large degree of market power. The finding of the theoretical model were consistent with that of the empirical model, where the price of certified seed for varieties involved in the identity preserved production and marketing program were priced higher than conventional varieties. The difference in price was found to be greater than the premiums offered by the Identity Preserved Contract Program marketing and/or production contracts for Saskatchewan farmers that received average yields and average prices of grain.

The focus of this thesis is to explore the influence of market power possessed by seed input companies on rent distribution in an identity preserved production and marketing system. This thesis develops a theoretical model to estimate rent distribution between participants in an identity preserved production and marketing system under constrained production and the elicitation of a premium from market development activities in the presence of a range of seed ownership structures. The thesis employs an empirical model to examine rent distribution of two varieties involved in the Canadian Wheat Boards Identity Preserved Contract Program.<p> The theoretical model demonstrates that market development activities for an identity preserved production and marketing program had a diminished impact on farmers when the seed industry possessed a large degree of market power. The finding of the theoretical model were consistent with that of the empirical model, where the price of certified seed for varieties involved in the identity preserved production and marketing program were priced higher than conventional varieties. The difference in price was found to be greater than the premiums offered by the Identity Preserved Contract Program marketing and/or production contracts for Saskatchewan farmers that received average yields and average prices of grain.

Agency theory, proposed by previous studies such as Guidry, Leone, and Rock (1999) and Arya and Huey-Lian (2004), suggests that bonus and other accounting-metric-based compensation can motivate managers to perform well in the short horizon while equity-based compensation, such as restricted shares and stock options, can serve the purpose of aligning the long run interests of shareholders and managers. The empirical evidence, for example Jensen and Murphy (1990), Kaplan (1994), Hall and Liebman (1998), Murphy (1999), Zhou (2000), and Chowdhury and Wang (2009), confirms that incentive compensation is popular in many countries. However, recent studies suggest that the relation between performance and incentive compensation is weak. Shaw and Zhang (2010) find that CEO bonus compensation is less sensitive to poor earnings performance than it is to good earnings performance. Fahlenbrach and Stulz (2011) study the relation between bank performance during the 2008 bank crisis and the bonus and equity-based compensation of bank CEOs. They find that banks with CEOs whose incentives were better aligned with the interests of shareholders performed worse than other banks. This study examines whether ownership structure can explain the differences among compensation structures of chief executive officers (CEOs). In particular, we examine the compensation structure of three distinct groups: family-controlled, institution-controlled, and widely-held firms. We distinguish these three kinds of firms to represent different levels of market imperfection. Compared with family-controlled and institution-controlled firms, widely held firms have dispersed ownership. The most significant weakness of a widely-held ownership structure is the lack of shareholder monitoring due to the unmatched benefit and cost of monitoring for small shareholders. In contrast, a holder of a large block of shares will have the same monitoring costs but the benefits to this shareholder from monitoring management and reducing agency costs would be substantial and larger than the costs of monitoring. Thus the presence of a large shareholder will reduce the agency costs. In addition, large shareholders may be willing to spend time and effort continuously to collect more information on management performance or to estimate the firms investment projects. This behaviour will reduce the problems that arise from information asymmetry and will decrease the waste of free cash flows by managers. Both family-controlled firms and institution-controlled firms have large shareholders. However, whether or not the control shareholders are playing an active monitoring role is still an important issue. From the viewpoint of aligning the interests of managers and shareholders, the family-controlled group is superior to the institution-controlled group. First, institutions are more flexible in moving their ownership from one firm to another depending on performance. If the costs of monitoring are high in comparison to the costs of rebalancing portfolios, institutions will choose to rebalance instead of monitoring. In contrast, a family that controls a firm does not have this flexibility. Second, family-controlled firms generally assign influential positions to family members whose focus is in line with that of the family group. Even though a non family member may be appointed as the manager, the level of monitoring is significant given the high ownership concentration by the family. However, the level of monitoring by a family may not necessarily translate into a reduction of agency costs for minority shareholders. Indeed, previous studies suggest that significant family ownership may lead to agency costs of its own. The family may divert company resources for its own benefit despite the presence of a manager who may or may not be a family member. Essentially, the family and the manager can collude to spend on perks and personal benefits at the expense of minority shareholders. Chourou (2010) suggests that excessive compensation of chief executive officers at some family owned Canadian corporations may be viewed as expropriation of minority rights. Overall, the main objective of this study is to examine whether block-holder monitoring is a substitute to the incentive components of compensation. We propose that as we move from widely-held to institution-controlled the level of monitoring may or may not increase. However, as we move further into higher control, as may be suggested by family ownership, the level of monitoring will increase but this monitoring may not necessarily reduce agency costs. The results show that the institution-controlled firms pay significantly less bonus compensation per dollar of assets than widely-held firms but the differences in equity based compensation are not significant. In addition, the family-controlled corporations offer the lowest performance-based compensation, bonus per dollar of assets, in comparison to the institution-controlled and the widely-held groups. These results indicate that the family-controlled Canadian corporations rely more on monitoring managers than paying them incentive payments in the form of bonus payments. In addition, our results indicate that the institutions which control corporations may be monitoring the managers of these corporations but this monitoring does not significantly reduce the need for the long-term incentive components of compensation. This result suggests that institutions may monitor the short-term performance effectively but they may prefer rebalancing their portfolio rather than monitoring long term performance.

The purpose of this research is to explore the motivation of business group firms to adopt pyramidal ownership structures. The traditional approach claims that pyramids are useful in tunneling resources to other affiliates by transferring value to firms with high cash flow rights of controlling shareholders. Using a unique dataset of 7,180 Ecuadorian firms, I analyze the transmission of profits' shocks among group firms to assess the existence and the amount of tunneling. The comprehensive ownership information allows me to identify pyramidal and horizontally owned group firms separately and better understand the nature of their ownership structure. The results provide support for the existence of tunneling in Ecuadorian business groups. About 70% of the profits of the average group firm are transferred to another affiliate, although only half of this money shows up on its books. An alternative explanation for the flow of money among group firms is the existence of internal capital markets to substitute for imperfections in the external market. I test this hypothesis by comparing the impact of cash flow availability in the investment decision of group firms with that of stand-alone firms. Group firms' cash flow to investment sensitivity appears to be only half of the value for comparable standalone firms. Moreover, group liquidity is also a determinant of the average group firm's investment, especially for pyramidal firms. The analysis sheds light on the nature of business groups in Latin America, their ownership patterns, and their resource allocation decisions.

The purpose of this study is to describe and examine the attitudes of coffee cooperative members towards the ownership of the SPREAD cooperatives in relation to cooperative sustainability. In addition this study identifies barriers faced by member farmers and subsequently provides recommendations on ways in which SPREAD can help its member farmers achieve a more sustainable livelihood. Previous analysis of the SPREAD project and its member cooperatives has suggested that coffee cooperative members do not feel ownership of the cooperative and have not benefited from the cooperatives, leaving the sustainability of the cooperatives to question. The research questions used for this study focused on issues of sustainability, ownership and organizational impact and barriers. All of the cooperatives studied over the course of this project receive funds from the USAID funded project SPREAD. The population of interest comprised members from three of the fourteen cooperatives receiving aid from the SPREAD project. A sample of 52 individuals participated in the study, with the data being collected from mid-July to mid-August, 2009. Quantitative data were collected using a close-ended category-scale questionnaire. The close-ended category-scale questionnaires were analyzed based on the frequency and percentage of responses. Major findings of this study included that coffee cooperative members felt that in the absence of SPREAD, the coffee cooperatives would be unable to function. In regards to ownership, members felt as if they owned the cooperatives. The disparity between these two constructs shows that once SPREAD no longer supports the cooperatives, then sustainability is to question and further they are more susceptible to collapse.

Research on holding bank¡¦s risk-taking behavior have focused on the effect on the performace. Using data in Taiwan, this paper investigates the relationship between managerial ownership, franchise value and domestic bank¡¦s risk-taking behavior. ¡@This paper includes independent variances of total return risk, systematic risk and idoiosyncratic risk derived from the capital market, and includes dependent variances of managerial ownership, franchise value, financial leveal, operating leveal and total assets. ¡@This research indicates that: ¡@1.manager ownership is negatively related to both total return risk, systematic risk and idoiosyncratic risk. ¡@2.franchise value is negatively related to both total return risk and idoiosyncratic risk, and unlated to systematic risk. ¡@3.financial leveal is unrelated to both total return risk ,systematic risk and idoiosyncratic risk. ¡@4.operating leveal is positively related to both total return risk and idoiosyncratic risk, and unlated to systematic risk. ¡@5.total assets is unrelated to both total return risk, systematic risk and idoiosyncratic risk.

When a privately-held firm goes public through an IPO ¡]initial public offering¡^, the ownership structure of the IPO firm would change due to external equity financing. The ownership structure is related to the firm performance with respect to the corporate finance theory. Therefore, we agree that the relationship between the ownership structure and IPO long-run performance is worth examining. With respect to the corporate control and agency theory, we investigate the effect of the increase of insider ownership on the performance of IPO firms. We show that the increase of board ownership deteriorates the long-run performance of IPO firms. However, the increase of the institutional ownership improves IPO long-run performance. Basically, the agency theory implies that there exists positive relations between the insider ownership and performance and between the institutional ownership and performance. However, the corporate control theory agrees that the higher the insider ownership, the poorer the performance of the firms. Therefore, our results show that the institutional ownership can mitigate the agency problem while the role of corporate control subsumes the agency problem with respect to the insider ownership.

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ABSTRACT Prior relative studies document that the mean initial returns of IPOs is significantly positive. Yet, several researches find that the positive abnormal returns appear to be a short-run phenomenon, and the long-run performance of IPOs is poor even negative. Based on a sample of 151 Taiwan IPO firms issued form 1991 to 1996, this study employ the Fama-French three factors model to measure the expected returns of securities. Consistent with predictions, the empirical results show positive short-run returns and a negative long run returns. Meanwhile, there is a negative relationship between institutional ownership and the holding period abnormal returns aftermarket. The conclusion is consistent with the concerns of long-term profitability of institutional investors, as they used to buy low for the benefits of long-term profits. This study also examines the influential factors of institutional ownership. The findings indicate that both firm size and insiders are significantly positive related to institutional ownership. However, neither managerial ownership nor debt is related to institutional ownership. On the other hand, there is significantly negative relationship between stock dividend and institutional ownership, except the second year. At the initial and the first month, cash dividend is negative related to institutional ownership, and industry dummy variable (electronic industry or not) is positive related to institutional ownership. Besides, there is no relationship between cash dividend and institutional ownership, nor was there any relationship between industry dummy variable and institutional ownership. According to the findings, most institutional investors want to maintain the diversification and long-term profits of the portfolio investment.