Three essays on corporate control
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This dissertation consists of the three papers “Stakeholder rights and economic performance: The profitability of nonprofits” (with Øyvind Bøhren), “Stakeholder conflicts and dividend policy: A cleaner test” (with Øyvind Bøhren and Pål E. Steen), and “Ownership and the decision to go public”. Each ownership structure comes with its own costs. These costs include contracting costs between owners and non-owners, coordination costs between owners, and costs related to delegated management. A rich literature has evolved describing how these costs can be minimized. (Fama, 1980) argues that in large organizations, the main mechanism for discipline and control of management is the competitive environment in which the firm operates. This dissertation looks at this fundamental governance issue from three angles. First, we shed some light on the question of what is the optimal organizational form. We document that firms with very different governance structures successfully compete in a single industry (paper 1). Then we go on to investigate how the stakeholders that do control the firm treat non-controlling stakeholders. We find that controlling stakeholders use their power carefully not to alienate non-controlling stakeholders (paper 2). Finally, we investigate what makes the firm's controlling owners willing to relinquish some of their ownership rights. Our findings suggest that owners with large holdings are more reluctant to take their firm to the public market (paper 3).