Ownership Effects on Unrelated Diversification: An Institutions' Perspective

Purpose To show that differences in the extent to which firms engage in unrelated diversification can be attributed to differences in ownership structure. Methodology/approach We draw on longitudinal data and use a panel analysis specification to test our hypotheses. Findings We find that unrelated diversification destroys value; pressure-sensitive Anglo-American owners in a firm’s equity reduce unrelated diversification, whereas pressure-resistant domestic owners increase unrelated diversification; the greater the firm’s free cash flow, the greater the negative effect of pressure-sensitive Anglo-American owners on unrelated diversification. Research limitations/implications We contribute to corporate governance and strategy research by bringing in owners’ institutional origin as a shaper of owner preferences in particular with regards to unrelated diversification. Future research may expand our investigation to more than one home institutional context, and theorize on institutional origin effects beyond the dichotomy between Anglo-American and non-Anglo-American (not oriented toward shareholder value maximization) owners. Practical implications Policy makers, financial analysts, owners, and managers may want to reflect about the implications of ownership structure, as well as promoting or joining corporations with particular ownership configurations. Social implications A shareholder value-destroying strategy, such as unrelated diversification has adverse consequences for society at large, in terms of opportunity costs, that is, resources could be allocated to value-creating activities instead. Promoting an ownership configuration that creates value should contribute to social welfare. Originality/value Owners may not be exclusively driven by shareholder value maximization, but can be influenced by normative beliefs (biases) stemming from the institutional context they originate from.

Remote control of pulmonary blood flow: a dream comes true.

The indication for pulmonary artery banding is currently limited by several factors. Previous attempts have failed to produce adjustable pulmonary artery banding with reliable external regulation. An implantable, telemetrically controlled, battery-free device (FloWatch) developed by EndoArt SA, a medical company established in Lausanne, Switzerland, for externally adjustable pulmonary artery banding was evaluated on minipigs and proved to be effective for up to 6 months. The first human implant was performed on a girl with complete atrioventricular septal defect with unbalanced ventricles, large patent ductus arteriosus and pulmonary hypertension. At one month of age she underwent closure of the patent ductus arteriosus and FloWatch implantation around the pulmonary artery through conventional left thoracotomy. The surgical procedure was rapid and uneventful. During the entire postoperative period bedside adjustments (narrowing or release of pulmonary artery banding with echocardiographic assessment) were repeatedly required to maintain an adequate pressure gradient. The early clinical results demonstrated the clinical benefits of unlimited external telemetric adjustments. The next step will be a multi-centre clinical trial to confirm the early results and adapt therapeutic strategies to this promising technology.