The Double-Edged Sword Effects of Mechanisms Disconnecting Cash-Flow Rights From Voting Rights

Asma Fattoum, Zied Guedri

    Research output: Contribution to conferencePaperResearchpeer-review


    On the one hand, defensive mechanisms such as dual class shares, pyramid structures and pact agreements may produce positive effects on firm performance because they enable CEOs to make long-term and risky investments without being worried by short-term market forces and risk-averse shareholders. On the other hand, defensive mechanisms may create considerable opportunities for principal-principal agency costs, discretion for private benefits expropriation and strategic myopia. This study develops a contingency framework to reconcile these two perspectives. It suggests that the nature of the effects of defensive mechanisms on firm performance depend upon CEO’s tenure, human capital and social capital. We test these hypotheses using a sample of 725 French firms over the 1995-2011 period. Our results indicate that CEO’s tenure moderates negatively the impact of defensive mechanisms on firm performance whereas CEO’s human and social capital reinforce positively the performance consequences of defensive mechanisms
    Original languageEnglish
    Publication date2014
    Number of pages40
    Publication statusPublished - 2014
    EventThe Academy of Management Annual Meeting 2014: The Power of Words - Philadelphia, United States
    Duration: 1 Aug 20145 Aug 2014
    Conference number: 74


    ConferenceThe Academy of Management Annual Meeting 2014
    Country/TerritoryUnited States
    Internet address

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