Antonio Dávila

Publications

• Manuscript Type Empirical Research Question/Issue This paper addresses the effect of having multiple large shareholders on shareholder protection. More specifically, we examine to what extent this effect depends on whether such large shareholders are beneficiary or fiduciary. Research Findings/Insights Analyzing longitudinal, hand-collected data covering Swiss listed companies, we find that having several large shareholders leads to overall higher shareholder protection (i.e. adoption of more formal corporate governance mechanisms). This is because large shareholders have an interest in putting more formal governance mechanisms in place when there is another large shareholder that might try to extract rents at the expense of others. Moreover, we find that this effect is driven by the presence of several beneficiary shareholders, i.e. shareholders that invest their own wealth in the company in contrast to dispersed ownership and fiduciary shareholders, i.e. shareholders acting on behalf of others. Theoretical/Academic Implications Building on recent developments in agency theory, this paper contributes to the corporate governance literature by empirically showing that potential ?principal-principal? conflicts among large shareholders lead to overall better shareholder protection in terms of more formal governance mechanisms being adopted. This finding contrasts with situations in which there is only one large shareholder that does not have an interest in strengthening formal corporate governance. Our findings imply, however, that the characteristics of the large shareholders matter: Fiduciary shareholders in the Swiss setting are mostly passive buy-and-hold shareholders and therefore do not engage extensively in improving shareholder protection. Beneficiary shareholders, in contrast, directly intervene in the governance of the firm (i.e. governance by voice), so that in the presence of multiple beneficiary shareholders, more formal governance mechanisms help to monitor not only management but the other large shareholders as well. In addition, more formal governance mechanisms serve as a platform to coordinate their diverging objectives. Practitioner Implications We demonstrate the influence of a second (or several) large beneficiary shareholder(s), on corporate governance and the benefit to all shareholders. In addition, we propose the strengthening of governance mechanisms as a platform to reconcile conflicting interests among prominent shareholders and contribute to the debate on the allocation of certain voting privileges to long-term shareholders.

• This paper examines organizational learning in a target setting. Organizations commonly set targets--explicit and quantitative reference points--for their operational units that reflect top management aspirations for these units. Targets are commonly the outcome of a subjective process where supervisors combine their explicit and tacit knowledge to set performance expectations for their units. Using a proprietary database from a large European travel company during a period of rapid expansion, we document the effect of organizational learning by studying how targets change as units mature. In particular, we examine managers' experiential learning from branches' past performance and their vicarious learning from branches in the same region in determining performance expectations over the life cycle of branches. Our results indicate that, in setting performance targets, managers increase the weight of a branch's past performance and decrease the weight of comparable branches' performance as the branch matures. Vicarious learning, where managers extrapolate the performance of comparable branches to a new branch, dominates in the early years. Over time, this type of learning is replaced by experiential learning as experience accumulates. We document how early on in the life of branches, these two types of learning interact; this interaction disappears as branches mature. Furthermore, we find that managers learn differently from successes and failures early in the lives of the new units, and this learning is affected by the magnitude of the successes and failures.

• We use a field research design to examine management control systems in creative teams working in fashion firms. The study is structured as an in-depth case study followed by five additional cases. We find management control systems to be deeply embedded in the work environment of creative teams. They are designed to define, negotiate, and legitimize the designs that emerge from the creation process. We identify a set of systems (directional) that define the creative space of design teams and work as interfaces with the rest of the company. We also find a set of systems (inspirational) that guide the creative process to enhance novelty, and provide a common vision to support consistency across the overall collection of products designed. In addition, our analysis documents how firms following different strategies - fine fashion versus mass market - design these systems differently to adapt their creative process to their strategic demands.

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