The Effect of Control Type on Some Aspects of Corporate Behavior in the US, UK, and Israel

It has been argued that the separation of ownership from control in a corporation may lead to a conflict of interest between managers who prefer policies which emphasize growth regardless of their effect on profitability and the owner shareholder who is primarily interested in maximizing proflts and adjusts investment accordingly. The paper examines data drawn from financial accounts in the US, UK, and Israel in order to ascertain whether this argument is valid. These accounts include state-owned corporations, unlisted firms, as well as listed corporations. This enables the researchers to compare firms with radically different degrees of owner control. Even though the findings regarding profitability are important, of greater concern is the correlation between that profitability and the growth of the firm.