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Agency theory and the influence of equity ownership structure on corporate diversification strategies
Author(s) -
Denis David J.,
Denis Diane K.,
Sarin Atulya
Publication year - 1999
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/(sici)1097-0266(199911)20:11<1071::aid-smj70>3.0.co;2-g
Subject(s) - diversification (marketing strategy) , principal–agent problem , equity (law) , agency (philosophy) , business , agency cost , accounting , financial economics , economics , industrial organization , finance , corporate governance , marketing , sociology , political science , law , social science , shareholder
We articulate the agency theory view of managerial decision making and its implications for corporate diversification strategies. From agency theory, we generate testable predictions for the relation between equity ownership structure and diversification strategies and review the existing evidence on this relation. On balance, the evidence strongly supports the view that ownership structure influences corporate strategy. Copyright © 1999 John Wiley & Sons, Ltd.