Ownership Structure and Value of the Largest European Firms: The Importance of Owner Identity
AbstractThe paper examines the relationship betweenownership structure and value of the largestEuropean firms. Using simultaneous estimationand controlling for nation and industry effectswe find that ownership concentration (measuredby the fraction of ``closely held'' shares) hasa positive effect on firm value (market-to-bookvalue of equity), when the largest owner is afinancial institution or another corporation. If the largest owner is a family or a singleindividual, ownership concentration has noeffect on firm value, and the effect isnegative if the largest owner is a governmentorganisation. Firm value is found to have apositive feedback effect on ownershipconcentration except for governments, whichhold higher stakes in low-value firms. Inother words, owner-identity matters,particularly in a Continental Europeaninstitutional setting where ownershipconcentration is high and minority investorprotection is low. Copyright Kluwer Academic Publishers 2003
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Bibliographic InfoArticle provided by Springer in its journal Journal of Management and Governance.
Volume (Year): 7 (2003)
Issue (Month): 1 (March)
Contact details of provider:
Web page: http://www.springerlink.com/link.asp?id=102940
firm value; owner identity; ownership structure; performance;
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Andrei Shleifer, 1998.
"State Versus Private Ownership,"
Harvard Institute of Economic Research Working Papers
1841, Harvard - Institute of Economic Research.
- McConnell, John J. & Servaes, Henri, 1990. "Additional evidence on equity ownership and corporate value," Journal of Financial Economics, Elsevier, vol. 27(2), pages 595-612, October.
- Maug, Ernst, 1996. "Corporate control and the market for managerial labour: On the decision to go public," European Economic Review, Elsevier, vol. 40(3-5), pages 1049-1056, April.
- Takeo Hoshi & Anil Kashyap & David Scharfstein, 1990.
"The Role of Banks in Reducing the Costs of Financial Distress in Japan,"
NBER Working Papers
3435, National Bureau of Economic Research, Inc.
- Hoshi, Takeo & Kashyap, Anil & Scharfstein, David, 1990. "The role of banks in reducing the costs of financial distress in Japan," Journal of Financial Economics, Elsevier, vol. 27(1), pages 67-88, September.
- Ghemawat, Pankaj & Khanna, Tarun, 1998. "The Nature of Diversified Business Groups: A Research Design and Two Case Studies," Journal of Industrial Economics, Wiley Blackwell, vol. 46(1), pages 35-61, March.
- Eckel, Catherine C & Vermaelen, Theo, 1986. "Internal Regulation: The Effects of Government Ownership on the Value of the Firm," Journal of Law and Economics, University of Chicago Press, vol. 29(2), pages 381-403, October.
- Jean Tirole, 1988. "The Theory of Industrial Organization," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262200716, December.
- Fama, Eugene F & Jensen, Michael C, 1983. "Agency Problems and Residual Claims," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 327-49, June.
- Hansmann, Henry, 1988. "Ownership of the Firm," Journal of Law, Economics and Organization, Oxford University Press, vol. 4(2), pages 267-304, Fall.
- Josef Lakonishok & Andrei Shleifer & Richard Thaler & Robert Vishny, 1991.
"Window Dressing by Pension Fund Managers,"
NBER Working Papers
3617, National Bureau of Economic Research, Inc.
- Randall K. Morck, 2000. "Concentrated Corporate Ownership," NBER Books, National Bureau of Economic Research, Inc, number morc00-1, October.
- La Porta, Rafael & Lopez-de-Silanes, Florencio & Schleifer, Andrei & Vishny, Robert, 2001.
"Investor Protection and Corporate Governance,"
Working Paper Series
rwp01-017, Harvard University, John F. Kennedy School of Government.
- Fama, Eugene F. & Jensen, Michael C., 1985. "Organizational forms and investment decisions," Journal of Financial Economics, Elsevier, vol. 14(1), pages 101-119, March.
- Marianne Bertrand & Paras Mehta & Sendhil Mullainathan, 2000.
"Ferreting Out Tunneling: An Application to Indian Business Groups,"
NBER Working Papers
7952, National Bureau of Economic Research, Inc.
- Marianne Bertrand & Paras Mehta & Sendhil Mullainathan, 2002. "Ferreting Out Tunneling: An Application To Indian Business Groups," The Quarterly Journal of Economics, MIT Press, vol. 117(1), pages 121-148, February.
- Venkiteswaran N, . "Ethics, Values and Corporate Governance," IIMA Working Papers WP1997-08-01_01459, Indian Institute of Management Ahmedabad, Research and Publication Department.
- Hausman, William J & Neufeld, John L, 1991. "Property Rights versus Public Spirit: Ownership and Efficiency of U.S. Electric Utilities Prior to Rate-of-Return Regulation," The Review of Economics and Statistics, MIT Press, vol. 73(3), pages 414-23, August.
- Dewenter, Kathryn & Novaes, Walter & Pettway, Richard H, 2001. "Visibility versus Complexity in Business Groups: Evidence from Japanese Keiretsu," The Journal of Business, University of Chicago Press, vol. 74(1), pages 79-100, January.
- Hart, Oliver, 1995. "Firms, Contracts, and Financial Structure," OUP Catalogue, Oxford University Press, number 9780198288817, September.
- Short, Helen, 1994. " Ownership, Control, Financial Structure and the Performance of Firms," Journal of Economic Surveys, Wiley Blackwell, vol. 8(3), pages 203-49, September.
- Demsetz, Harold & Lehn, Kenneth, 1985. "The Structure of Corporate Ownership: Causes and Consequences," Journal of Political Economy, University of Chicago Press, vol. 93(6), pages 1155-77, December.
- Jean-Jacques Laffont & Jean Tirole, 1993. "A Theory of Incentives in Procurement and Regulation," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262121743, December.
- Harvey James, 1999. "Owner as Manager, Extended Horizons and the Family Firm," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(1), pages 41-55.
- Randall Morck, 2000. "Introduction to "Concentrated Corporate Ownership"," NBER Chapters, in: Concentrated Corporate Ownership, pages 1-16 National Bureau of Economic Research, Inc.
- Brown, Keith C & Harlow, W V & Starks, Laura T, 1996. " Of Tournaments and Temptations: An Analysis of Managerial Incentives in the Mutual Fund Industry," Journal of Finance, American Finance Association, vol. 51(1), pages 85-110, March.
- Venkiteswaran N, . "Corporate Governance for Shareholder Value," IIMA Working Papers WP2000-07-01, Indian Institute of Management Ahmedabad, Research and Publication Department.
- Del Guercio, Diane, 1996. "The distorting effect of the prudent-man laws on institutional equity investments," Journal of Financial Economics, Elsevier, vol. 40(1), pages 31-62, January.
- Marco Becht & Fabrizio Barca, 2001. "The control of corporate Europe," ULB Institutional Repository 2013/13302, ULB -- Universite Libre de Bruxelles.
- McConaughy, Daniel L. & Walker, Michael C. & Henderson, Glenn Jr. & Mishra, Chandra S., 1998. "Founding family controlled firms: Efficiency and value," Review of Financial Economics, Elsevier, vol. 7(1), pages 1-19.
- Cable, John R, 1985. "Capital Market Information and Industrial Performance: The Role of West German Banks," Economic Journal, Royal Economic Society, vol. 95(377), pages 118-32, March.
- Sacristán-Navarro, María & Gómez-Ansón, Silvia & Cabeza-García, Laura, 2011. "Large shareholders' combinations in family firms: Prevalence and performance effects," Journal of Family Business Strategy, Elsevier, vol. 2(2), pages 101-112, June.
- Christian Weiss & Stefan Hilger, 2012. "Ownership concentration beyond good and evil: is there an effect on corporate performance?," Journal of Management and Governance, Springer, vol. 16(4), pages 727-752, November.
- 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.
- Cucculelli, Marco & Marchionne, Francesco, 2012. "Market opportunities and owner identity: Are family firms different?," Journal of Corporate Finance, Elsevier, vol. 18(3), pages 476-495.
- Loukil, Nadia & Yousfi, Ouidad, 2010. "Does corporate governance affect stock liquidity in the Tunisian Stock Market?," MPRA Paper 28697, University Library of Munich, Germany, revised Feb 2011.
- Paul André & Walid Ben-Amar & Samir Saadi, 2014. "Family firms and high technology Mergers & Acquisitions," Journal of Management and Governance, Springer, vol. 18(1), pages 129-158, February.
- Sanchez-Bueno, Maria J. & Usero, Belen, 2014. "How may the nature of family firms explain the decisions concerning international diversification?," Journal of Business Research, Elsevier, vol. 67(7), pages 1311-1320.
- Luis H. Gutiérrez & Carlos Pombo, 2005. "Valuación y gobierno corporativo: elementos de juicio de Colombia," Research Department Publications 3217, Inter-American Development Bank, Research Department.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Guenther Eichhorn) or (Christopher F. Baum).
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.