CORPORATE CONTROL AND PERFORMANCE IN THE 1930s

Abstract

This paper tests the Berle and Means thesis that the dissemination of corporate ownership has allowed corporate managers to pursue goals other than profit maximization. Using piece‐wise linear regression analysis with a sample of large U.S. corporations in the 1930s, a nonlinear relation is estimated between the degree of dominant stockholder control and corporate performance. The empirical results lend some support for the Berle and Means view of the “modern” corporation. In particular, a small degree of stockholder control is found to be associated with a low level of corporate performance, ceteris paribus.

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