Grosman and Leiponen, 2018, Organizational Transparency and Power in Firm Ownership Networks - JCE Accepted Manuscript.pdf (850.21 kB)
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Organizational transparency and power in firm ownership networks

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journal contribution
posted on 19.07.2018, 10:12 by Anna GrosmanAnna Grosman, Aija Leiponen
When public institutions do not support information disclosure and contract enforcement, controlling owners may compensate by setting up ownership networks that facilitate the exchange of resources and alignment of interests. We examine how firms’ controlling owners draw power from ownership networks to provide access to resources for or to expropriate resources from their firms. Horizontal power originates from network centrality and is associated with resource access whereas vertical power originates from principal-principal agency conflicts and is associated with exploitation of minority shareholders. We highlight the impact of horizontal and vertical power through their interaction effects with transparency and disclosure (TD) practices on fixed investments and performance in Russian firms. We find that TD and horizontal power or connectedness are substitutes, while TD and vertical power are complements in their effects on fixed investment and firm performance. Without a strong commitment to TD, powerful owners may thus deprive the firm of productive investments

History

School

  • Loughborough University London

Published in

Journal of Comparative Economics

Volume

46

Issue

4

Pages

1158-1177

Citation

GROSMAN, A. and LEIPONEN, A., 2018. Organizational transparency and power in firm ownership networks. Journal of Comparative Economics, 46 (4), pp.1158-1177.

Publisher

Elsevier © Association for Comparative Economic Studies

Version

AM (Accepted Manuscript)

Publisher statement

This paper was accepted for publication in the journal Journal of Comparative Economics and the definitive published version is available at https://doi.org/10.1016/j.jce.2018.07.001

Acceptance date

05/07/2018

Publication date

2018-08-18

Copyright date

2018

ISSN

0147-5967

Language

en