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Ownership and firm performance in Gulf countries
Finance & Accounting
Pages 24 (6024 words)
CHAPTER 1 INTRODUCTION This chapter provides an overview of the study. It involves an introduction of the basic elements and components of dissertation and the core ideas and concepts that will be studied in this part of the dissertation. The chapter will involve an examination of the background of the core factors that are meant to be analysed and reviewed in the research…
1.1 Background In 1932, Berle and Means published The Modern Corporation and Private Property which argued that the modern American business of the 1930s was better off if there was a separation of ownership and control. This created the grouping of the representation of shareholders and managers into distinct classes to promote efficiency and effectiveness. The idea was rooted in the fact that there were many large and expanding corporations growing in America who had unaccountable managers. Hence, the popular calls of sociologists (particularly political scientists who believed in the separation of powers) and lawyers (who saw the dangers of rights without obligations to account for the use of rights) culminated in Berle and Means' article which argued for the separation of powers between shareholders and managers in order to create a system of accountability. Indeed, the concept of separating the role of owners from the activities of managers thrived for the decades after the 1930s. Jensen and Meckling (1976) defined the agency theory as was based on the presumption that there is a conflict of interest in the different aspects of a given company or corporate entity. ...
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