For whom the firm toils: A thesis investigating the ownership, board and performance linkages

This thesis is articulates and empirically testing the effect of ownership on board composition and ultimately on firm performance. As per extant literature, ownership is subsumed into corporate governance and studies build on agency theory's premise of dispersed shareholders as the owners of the firm. Governance literature also accept Board of Directors as representatives of the dispersed shareholders, mandated to discharge the investor-owners' fiduciary responsibility. The composition of the board is usually seen as a reflection of its effectiveness however the determination of board composition is not fully understood. Overall, governance is generally viewed in terms of mitigating the agency costs, which should lead to a homogeneous performance objective of firm value maximization. However recent meta-analyses do not find support for any direct relationship between any of the agency theory driven governance mechanisms. In addition, some recent studies also point towards concentrated ownership being the norm worldwide. Furthermore, there seems to be other types of owners apart from the dispersed investors as shareholders in a firm.;In conclusion, this thesis contributes to the growing awareness that corporate governance is not a 'one size fits all' mechanism and offers an alternative multi-theoretical framework that might help resolve the mixed findings in governance and ownership literature.;Building on these findings, this thesis proposes an alternative ownership framework, wherein ownership is analyzed in terms of the different types of shareholders within a firm - unlike previous focus on 'inside' managers and 'outside' dispersed investors. The basic premise of the thesis is to examine the possibility that neither the firm's ownership, nor its board composition, nor its performance objectives are homogeneous. Utilizing a multi-theoretic framework, this thesis examines and empirically tests ownership-board composition and ownership-performance relationships respectively. The conceptualization of ownership is as an aggregation, defined as combining the different types of owners and their respective ownership concentrations. The research setting is all US public firms for which ownership and board data is available, and the data is collated and analyzed by utilizing EQS software. I find empirical support for the multi-theoretic framework as well as general support for most of the proposed hypotheses.