Essays on the Costs and Benefits of Large Shareholders in Corporate Governance (summary section only)

“Corporate governance deals with the ways in which suppliers of finance to firms assure themselves of getting a return on their investment” (Shleifer and Vishny (1997, p. 737). According to La Porta et al. (1999), research in corporate finance relevant for most countries should focus on the incentives and capabilities of controlling shareholders to treat themselves preferentially at the expense of minority shareholders. Accordingly, this thesis sets out to answer a number of research questions regarding the role of large shareholders in public firms that have received little attention in the literature so far. A common theme in the essays stems from the costs and benefits of individual large-block owners and the role of control contestability from the perspective of outside minority shareholders. The first essay empirically examines whether there are systematic performance differences between family controlled and nonfamily controlled firms in Western Europe. In contrast to the widely held view that family control penalizes firm value, the essay shows that publicly traded family firms have higher performance than comparable firms. In the second essay, we present both theoretical and empirical analysis on the effects of control contestability on firm valuation. Consistent with the theoretical model, the empirical results show that minority shareholders benefit from a more contestable control structure. The third essay explores the effects of individual large-block owners on top management turnover and board appointments in Finnish listed firms. The results indicate that firm performance is an important determinant for management and board restructurings. For certain types of turnover decisions the corporate governance structure influences the performance / turnover sensitivity. In the fourth essay, we investigate the relation between the governance structure and dividend policy in Finnish listed firms. We find evidence in support of the outcome agency model of dividends stating that lower agency conflicts should be associated with higher dividend payouts.

Chronopotentiometry with power-law perturbation functions at an expanding plane electrode with and without a preceding blank period for systems with a coupled first-order homogeneous chemical reaction

The systems formalism is used to obtain the interfacial concentration transients for power-law current input at an expanding plane electrode. The explicit results for the concentration transients obtained here pertain to arbitrary homogeneous reaction schemes coupled to the oxidant and reductant of a single charge-transfer step and the power-law form without and with a preceding blank period (for two types of power-law current profile, say, (i) I(t) = I0(t−t0)q for t greater-or-equal, slanted t0, I(t) = 0 for t < t0; and (ii) I(t) = I0tq for t greater-or-equal, slanted t0, I(t) = 0 for t < t0). Finally the potential transients are obtained using Padé approximants. The results of Galvez et al. (for E, CE, EC, aC) (J. Electroanal. Chem., 132 (1982) 15; 146 (1983) 221, 233, 243), Molina et al. (for E) (J. Electroanal. Chem., 227 (1987) 1 and Kies (for E) (J. Electroanal. Chem., 45 (1973) 71) are obtained as special cases.

Component Inventory Costs in an Assembly Problem with Uncertain Supplier Lead-Times

We present a generic study of inventory costs in a factory stockroom that supplies component parts to an assembly line. Specifically, we are concerned with the increase in component inventories due to uncertainty in supplier lead-times, and the fact that several different components must be present before assembly can begin. It is assumed that the suppliers of the various components are independent, that the suppliers' operations are in statistical equilibrium, and that the same amount of each type of component is demanded by the assembly line each time a new assembly cycle is scheduled to begin. We use, as a measure of inventory cost, the expected time for which an order of components must be held in the stockroom from the time it is delivered until the time it is consumed by the assembly line. Our work reveals the effects of supplier lead-time variability, the number of different types of components, and their desired service levels, on the inventory cost. In addition, under the assumptions that inventory holding costs and the cost of delaying assembly are linear in time, we study optimal ordering policies and present an interesting characterization that is independent of the supplier lead-time distributions.

Rigorous scaling law for the heat current in disordered harmonic chain

We study the energy current in a model of heat conduction, first considered in detail by Casher and Lebowitz. The model consists of a one-dimensional disordered harmonic chain of n i.i.d. random masses, connected to their nearest neighbors via identical springs, and coupled at the boundaries to Langevin heat baths, with respective temperatures T_1 and T_n. Let EJ_n be the steady-state energy current across the chain, averaged over the masses. We prove that EJ_n \sim (T_1 - T_n)n^{-3/2} in the limit n \to \infty, as has been conjectured by various authors over the time. The proof relies on a new explicit representation for the elements of the product of associated transfer matrices.

Gauss law commutator in the chirally gauged Wess-Zumino-Witten model

We evaluate the commutator of the Gauss law constraints starting from the chirally gauged Wess-Zumino-Witten action. The calculations are done at tree level, i.e. by evaluating corresponding Poisson brackets. The results are compared with commutators obtained by others directly from the gauged fermionic theory, and with Faddeev's results based on cohomology.