Encyclopedia of Sustainable Management

Living Edition
| Editors: Samuel Idowu, René Schmidpeter, Nicholas Capaldi, Liangrong Zu, Mara Del Baldo, Rute Abreu

Control-Enhancing Mechanisms (CEMs)

  • Sara SaggeseEmail author
Living reference work entry
DOI: https://doi.org/10.1007/978-3-030-02006-4_879-1

Synonyms

Definition

Control-enhancing mechanisms (also called CEMs) identify the governance devices responsible for increasing the corporate control (Lin 2017; Saggese et al. 2016). Such mechanisms foster the deviation from the proportionality principle (i.e., “one share-one vote” rule – OSOV rule) between cash flow rights and voting rights (Adams and Ferreira 2008; Burkart and Lee 2008; Grossman and Hart 1988) and concentrate the firm control in the hands of a limited group of shareholders (i.e., blockholders/majority shareholders) (Deminor Rating 2005; Institutional Shareholder Services 2007).

It is worth noting that the proportionality principle postulates that one share should imply the right to exercise one vote in order to allow the effective allocation of company resources by properly aligning ownership rights and risks to...

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Authors and Affiliations

  1. 1.Department of Economics, Management, InstitutionsUniversity of Naples “Federico II”NaplesItaly

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  • Kristijan Krač

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