The separation of ownership from control and investment performance

There is much evidence of a growing separation of corporate ownership from its control by management. This paper compares the performance of several diversified portfolios containing a total of 199 industrial corporations' common stocks in which the class of a given portfolio's stocks is a range of percentage of the total voting stock held by management. This is a test of stock market performance with respect to public information on the relative separation of ownership from control.Performance measures from a naive arbitrage model that is an adaptation of a simplified market model showed that stock market performance was independent of the relative separation of ownership from control over the 1964–1973 period.