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Ownership Concentration, Corporate Control Activity, and Firm Value: Evidence from the Death of Inside Blockholders

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Author Info
 Slovin, Myron B
Sushka, Marie E
Abstract

The authors analyze how ownership concentration affects firm value and control of public companies by examining effects of deaths of inside blockholders. They find shareholder wealth increases, ownership concentration falls, and extensive corporate control activity ensues. Share price responses are related to the deceased's equity stake. Control group holdings fall for two-thirds of the firms due to either the estate's dispersal or inheritors selling stock. A majority of firms become targets of control bids: three-quarters of bids are successful; one-third are hostile. The authors' evidence is broadly consistent with Stulz's (1988) model of the relationship between ownership concentration and firm value. Copyright 1993 by American Finance Association.

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Article provided by American Finance Association in its journal Journal of Finance.

Volume (Year): 48 (1993)
Issue (Month): 4 (September)
Pages: 1293-1321
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Handle: RePEc:bla:jfinan:v:48:y:1993:i:4:p:1293-1321

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  1. Francesco Giavazzi & Marco Battaglini, . "Should we trust banks when they sit on the board of directors?," Working Papers 117, IGIER (Innocenzo Gasparini Institute for Economic Research), Bocconi University. [Downloadable!]
  2. Burkart, Mike & Panunzi, Fausto & Shleifer, Andrei, 2002. "Family Firms," CEPR Discussion Papers 3234, C.E.P.R. Discussion Papers. [Downloadable!] (restricted)
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  3. Faccio, Mara & Parsley, Davie, 2007. "Sudden Deaths: Taking Stock of Geographic Ties," MPRA Paper 6042, University Library of Munich, Germany. [Downloadable!]
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