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Blockholders presence, identity and institutional context. Are they relevant for firm value?

Author

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  • Mário Sacramento Santos
  • António Carrizo Moreira
  • Elisabete Simões Vieira

Abstract

This study analyses the relationship between ownership concentration and firm value. Our findings, based on a dynamic panel data analysis, show that there is a quadratic relationship between the company's value and its ownership concentration. Additionally, our evidence suggests that for countries where investor protection is low, the relationship follows an inverted U shape, while for countries where investor protection is high, the relationship is positive and nearly linear. Moreover, the influence of blockholders depends on their identity. This paper highlights the superior performance of family firms in controlling agency problems, a situation which contrasts vis-à-vis institutional shareholders. Finally, we report that the family effect is nonlinear. Indeed the positive effect starts to taper off at around 30% of ownership being somewhat smaller and less statistically significant between 30% and 50% of ownership. Moreover, in contrast to recent studies, the family effect is more pronounced in majority-controlled firms.

Suggested Citation

  • Mário Sacramento Santos & António Carrizo Moreira & Elisabete Simões Vieira, 2013. "Blockholders presence, identity and institutional context. Are they relevant for firm value?," International Journal of Business Governance and Ethics, Inderscience Enterprises Ltd, vol. 8(1), pages 18-49.
    • Handle: RePEc:ids:ijbget:v:8:y:2013:i:1:p:18-49
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    Cited by:

    1. Ozgur Arslan-Ayaydin & Darold Barnum & Mehmet Baha Karan & Atilla Hakan Ozdemir, 2014. "How is Moral Hazard Related to Financing R&D and Innovations?," European Research Studies Journal, European Research Studies Journal, vol. 0(4), pages 111-131.
    2. María Consuelo Pucheta-Martínez & Inmaculada Bel-Oms & Gustau Olcina-Sempere, 2018. "Female Institutional Directors on Boards and Firm Value," Journal of Business Ethics, Springer, vol. 152(2), pages 343-363, October.

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