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Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: do too many cooks spoil the goulash?

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  • John S. Earle

    (Upjohn Institute for Employment Research, Central European University.)

  • Csaba Kucsera

    (Loránd Eötvös University)

  • Álmos Telegdy

    (CEU and the Economics Institute of the Hungarian Academy of Sciences.)

Abstract

We examine the impact of ownership concentration on firm performance using panel data for firms listed on the Budapest Stock Exchange, where ownership tends to be highly concentrated and frequently involves multiple blocks. Fixed-effects estimates imply that the size of the largest block increases profitability and efficiency strongly and monotonically, but the effects of total blockholdings are much smaller and statistically insignificant. Controlling for the size of the largest block, point estimates of the marginal effects of additional blocks are negative. The results suggest that the marginal costs of concentration may outweigh the benefits when the increased concentration involves "too many cooks". Copyright Blackwell Publishing Ltd 2005.

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Bibliographic Info

Article provided by Wiley Blackwell in its journal Corporate Governance: An International Review.

Volume (Year): 13 (2005)
Issue (Month): 2 (03)
Pages: 254-264

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Handle: RePEc:bla:corgov:v:13:y:2005:i:2:p:254-264

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Cited by:
  1. John S. Earle & Álmos Telegdy, 2007. "Ownership and Wages: Estimating Public-Private and Foreign-Domestic Differentials using LEED from Hungary, 1986-2003," NBER Working Papers 12997, National Bureau of Economic Research, Inc.
  2. Ariane Chapelle & Ariane Szafarz, 2005. "Controlling firms through the majority voting rule," ULB Institutional Repository 2013/149192, ULB -- Universite Libre de Bruxelles.
  3. J. David Brown & John S. Earle & Almos Telegdy, 2006. "The Productivity Effects of Privatization: Longitudinal Estimates from Hungary, Romania, Russia, and Ukraine," Journal of Political Economy, University of Chicago Press, vol. 114(1), pages 61-99, February.
  4. John S. Earle & Álmos Telegdy, 2008. "Ownership and Wages: Estimating Public-Private and Foreign-Domestic Differentials with LEED from Hungary, 1986 to 2003," NBER Chapters, in: The Analysis of Firms and Employees: Quantitative and Qualitative Approaches, pages 229-252 National Bureau of Economic Research, Inc.
  5. Joze P. Damiajn & Aleksandra Grogoric & Janez Prasnikar, 2004. "Ownership Concentration and Firm Performance in Slovenia," LICOS Discussion Papers 14204, LICOS - Centre for Institutions and Economic Performance, KU Leuven.
  6. Zsolt Bedo & Eva Ozsvald, 2008. "Codes of Good Governance in Hungary," IEHAS Discussion Papers 0818, Institute of Economics, Centre for Economic and Regional Studies, Hungarian Academy of Sciences.
  7. John S. Earle & Almos Telegdy, 2007. "Ownership and Wages: Estimating Public-Private and Foreign-Domestic Differentials with LEED from Hungary, 1986–2003," Upjohn Working Papers and Journal Articles 07-134, W.E. Upjohn Institute for Employment Research.
  8. Tsionas, Mike G. & Merikas, Andreas G. & Merika, Anna A., 2012. "Concentrated ownership and corporate performance revisited: The case of shipping," Transportation Research Part E: Logistics and Transportation Review, Elsevier, vol. 48(4), pages 843-852.
  9. Ariane Chapelle & Ariane Szafarz, 2006. "Control consolidation with a threshold: an algorithm," Working Papers CEB 06-007.RS, ULB -- Universite Libre de Bruxelles.
  10. Kashif Rashid & Seep Nadeem, 2014. "The Role of Ownership Concentration, its Types and Firm Performance: A Quantitative Study of Financial Sector in Pakistan," Oeconomics of Knowledge, Saphira Publishing House, vol. 6(2), pages 10-61, June.
  11. Yusnidah Ibrahim & Md Mohan Uddin & Kamarun Nisham Taufil Mohd & Mohd Sobri Minai, 2013. "Agency Costs and the Long-Run Performance of Debt Issuers," Asian Academy of Management Journal of Accounting and Finance, Penerbit Universiti Sains Malaysia, vol. 9(1), pages 67-87.

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