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Minority Control: An Analysis of British Companies using Voting Power Indices

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  • Leech, Dennis
Abstract
An exercise in the empirical use of voting power indices from cooperative game theory applied to ownership data for large companies, this paper contributes in two areas: (1) the analysis of company control based on shareholder voting power, and (2) the empirical use of power indices and understanding of the comparative properties of different indices. New algorithms for calculating power indices, which quantify voting power in weighted voting bodies like company meetings, are applied to detailed data on beneficial ownership of 444 large UK companies without majority control. The results show that the Banzhaf index is, and the Shapley-Shubik index is not, useful for this analysis and a control classification of the firms is obtained.

Suggested Citation

  • Leech, Dennis, 1999. "Minority Control: An Analysis of British Companies using Voting Power Indices," Economic Research Papers 269251, University of Warwick - Department of Economics.
    • Handle: RePEc:ags:uwarer:269251
    DOI: 10.22004/ag.econ.269251
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    References listed on IDEAS

    as
    1. Leech, Dennis, 1987. "Ownership Concentration and the Theory of the Firm: A Simple-Game-Theoretic Approach," Journal of Industrial Economics, Wiley Blackwell, vol. 35(3), pages 225-240, March.
    2. Leech, Dennis, 1990. "Power Indices and Probabilistic Voting Assumptions," Public Choice, Springer, vol. 66(3), pages 293-299, September.
    3. Straffin, Philip Jr., 1994. "Power and stability in politics," Handbook of Game Theory with Economic Applications, in: R.J. Aumann & S. Hart (ed.), Handbook of Game Theory with Economic Applications, edition 1, volume 2, chapter 32, pages 1127-1151, Elsevier.
    4. Roth, Alvin E., 1977. "Utility functions for simple games," Journal of Economic Theory, Elsevier, vol. 16(2), pages 481-489, December.
    5. Pradeep Dubey & Lloyd S. Shapley, 1979. "Mathematical Properties of the Banzhaf Power Index," Mathematics of Operations Research, INFORMS, vol. 4(2), pages 99-131, May.
    6. Rafael La Porta & Florencio Lopez‐De‐Silanes & Andrei Shleifer, 1999. "Corporate Ownership Around the World," Journal of Finance, American Finance Association, vol. 54(2), pages 471-517, April.
    7. Dennis Leech, 1988. "The Relationship Between Shareholding Concentration and Shareholder Voting Power in British Companies: A Study of the Application of Power Indices for Simple Games," Management Science, INFORMS, vol. 34(4), pages 509-527, April.
    8. repec:bla:scandj:v:90:y:1988:i:2:p:245-53 is not listed on IDEAS
    9. Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817.
    10. Short, Helen, 1994. "Ownership, Control, Financial Structure and the Performance of Firms," Journal of Economic Surveys, Wiley Blackwell, vol. 8(3), pages 203-249, September.
    11. J. W. Milnor & L. S. Shapley, 1978. "Values of Large Games II: Oceanic Games," Mathematics of Operations Research, INFORMS, vol. 3(4), pages 290-307, November.
    12. Leech, Dennis & Leahy, John, 1991. "Ownership Structure, Control Type Classifications and the Performance of Large British Companies," Economic Journal, Royal Economic Society, vol. 101(409), pages 1418-1437, November.
    13. N. Z. Shapiro & L. S. Shapley, 1978. "Values of Large Games, I: A Limit Theorem," Mathematics of Operations Research, INFORMS, vol. 3(1), pages 1-9, February.
    14. Philip Straffin, 1977. "Homogeneity, independence, and power indices," Public Choice, Springer, vol. 30(1), pages 107-118, June.
    15. Shapley, L. S. & Shubik, Martin, 1954. "A Method for Evaluating the Distribution of Power in a Committee System," American Political Science Review, Cambridge University Press, vol. 48(3), pages 787-792, September.
    Full references (including those not matched with items on IDEAS)

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