Opportunistic behaviors may influence managers' decisions to approve a new equity
issuance. A seminal study indicated how this is a powerful tool to bypass
shareholders' will through the dilution of their voting power and perpetuate the
interests of the managers: indeed, from their perspective,the transaction may
prove to be a useful tool to "build empires, entrench managers, and dilute shareholder
influence." Arguably, the self-interest that managers might prioritize through equity
issuances belong to the broader class of agency issues in public companies. While
articles dating back to the end of the twentieth century assumed that in the specific
context of equity issuances managers act in the best interest of the existing shareholders,
a recent finding suggests that new share issuances are not exempt from agency tensions and
supports the theory with empirical evidence. A previous empirical analysis in the same
field already flagged the case of managers seeking to sell new shares to sympathetic investors
through private placements with the ultimate purpose of entrenching themselves. Furthermore,
the heterogeneity of interests within the shareholders' class should not be undermined in
light of the well-established majority-minority conflict in the public firm, which seems to be
even stronger in the context of this specific transaction. In order to point out the incentives
that might lead managers to approve strategic issuances to affect the shareholders' voting
power, it is critical to understand the different agency tensions that possibly arise between
the managers and the shareholders. Namely, this Section addresses separately -- following the
established pattern in corporate governance literature -- managers' incentives in public
corporations whose control is contested and those in controlled public corporations.