The Profit-Performance Effects of the Separation of Ownership from Control in Large U.S. Industrial Corporations.

After a survey of the empirical studies of Monsen, Chiu, and Cooley, of Kamerschen, and of Larner on the effects of the separation of ownership from control, this paper presents a study which shows that among firms with a high degree of monopoly power, management-controlled firms report significantly lower profit rates than owner-controlled firms. The works of Bain, Mann, and Shepherd and a 1967 FTC study supply information on barriers to entry, which more aptly capture the effect of separation of ownership and control. The findings confirm Hall and Weiss' conclusion that there is less variation in profit rates among large firms than among small ones.