Analysis - The Structure of Corporate Ownership: Causes and Consequences
Analysis - The Structure of Corporate Ownership: Causes and Consequences This paper provides an analysis of the article “The Structure of Corporate Ownership: Causes and Consequences” by Harold Demsetz and Kenneth Lehn, 1985, Journal of Political Economy, 95(6): 1155-1177, based on the ten basic claims of scientific research and Toulmin’s model of argumentation. To begin with, the question that the researcher proposes to investigate, which is whether there are any significant factors that influence a company’s ownership structure, is relevant because U.S corporations’ ownership structure varies widely and further findings on any significant factor will advance companies’ attempts on maximizing their performance. The reason for instigating this research dated back to Berle and Means, from which Demsetz and Lehn claimed that evidence of a relationship between firm performance and ownership concentration was never found (Demsetz and Lehn, 1985, p.1155). Motivated to shed light on this ongoing topic, the authors have decided to further explore some of the forces that they feel may influence the structure of corporate ownership concentration.
Based on the Berle-Means thesis, which was the focus of debate for more than half a century, “diffuseness of ownership is said to render owners of shares powerless to constrain professional management” (Demsetz and Lehn, 1985, p.1173), making agency theory an appropriate and relevant framework for investigating the question in this particular setting. This alleged partition of ownership and control continues to be an important figure both in the “economic theory of organization and in the ongoing debate concerning the social significance of the modern corporation.” (Demsetz and Lehn, 1985, p.1155). This notion is consistent with the use of 511 large US corporations as statistical samples in the article, since “large publicly traded corporations are frequently characterized as having highly diffuse ownership structures that
Based on the Berle-Means thesis, which was the focus of debate for more than half a century, “diffuseness of ownership is said to render owners of shares powerless to constrain professional management” (Demsetz and Lehn, 1985, p.1173), making agency theory an appropriate and relevant framework for investigating the question in this particular setting. This alleged partition of ownership and control continues to be an important figure both in the “economic theory of organization and in the ongoing debate concerning the social significance of the modern corporation.” (Demsetz and Lehn, 1985, p.1155). This notion is consistent with the use of 511 large US corporations as statistical samples in the article, since “large publicly traded corporations are frequently characterized as having highly diffuse ownership structures that