Cash Recovery Rate, Corporate Control and Corporate Performance.

In this dissertation the determinants of ex post rates of return are examined for evidence of managerial discretion in firms with strong stockholder (family) control as opposed to manager control. A managerial wealth maximization model is used to analyze the firms' performance. Bivariate and multivariate analyses were conducted on a sample of 420 firms from the Fortune 500 survey for the year 1979. Three measures of return; shareholder return, accounting return and cash recovery rate were used as dependent variables. The independent variables are growth rate, dividend policy, market structure, and risk. The results indicate that when the shareholder return or cash recovery rate is used to evaluate economic performance, type of control has no effect upon performance. When accounting return is used as the indicator of economic performance, manager control firms have a significantly higher rate of return than owner controlled firms. After controlling for differences in size and risk with an analysis of covariance procedure the differences in accounting return are no longer significant. Consequently the findings suggest that type of managerial control is not strongly associated with differences in performance.PhDAccountingUniversity of Michiganhttp://deepblue.lib.umich.edu/bitstream/2027.42/159245/1/8304558.pd