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Ownership structure, control and firm performance: the effects of vote-differentiated shares

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  • Per-Olof Bjuggren
  • Johan Eklund
  • Daniel Wiberg

Abstract

This article contributes to the literature on ownership, control and performance by exploring these relationships for Swedish listed companies (1997-2002). We find that firms, on average, are making inferior investment decisions and that the use of dual-class shares have a negative effect on performance. Marginal q is used as a measure of economic performance. It was presented in an article by Mueller and Reardon in 1993 and has recently been used in empirical studies of ownership and performance by, among others, Gugler and Yurtoglu (2003). Frequently Tobin's q is used in studies of this type, but Tobin's q has a number of disadvantages which can be circumvented by employing a marginal q. This study adds to earlier studies by investigating how the separation of vote and capital shares' creates a wedge between the incentives and the ability to pursue value-maximization. The relationships between the performance and different ownership characteristics like ownership concentration and foreign ownership are also investigated.

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File URL: http://www.tandfonline.com/doi/abs/10.1080/09603100600993737
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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Financial Economics.

Volume (Year): 17 (2007)
Issue (Month): 16 ()
Pages: 1323-1334

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Handle: RePEc:taf:apfiec:v:17:y:2007:i:16:p:1323-1334

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References

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  1. Marco Becht & Fabrizio Barca, 2001. "The control of corporate Europe," ULB Institutional Repository 2013/13302, ULB -- Universite Libre de Bruxelles.
  2. Klaus Gugler & Dennis C. Mueller & B. Burcin Yurtoglu, 2001. "Corporate Governance, Capital MarketDiscipline and the Returns on Investment," CIG Working Papers FS IV 01-25, Wissenschaftszentrum Berlin (WZB), Research Unit: Competition and Innovation (CIG).
  3. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
  4. Gugler, Klaus & Yurtoglu, Burcin B., 2003. "Average q, marginal q, and the relation between ownership and performance," Economics Letters, Elsevier, vol. 78(3), pages 379-384, March.
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Cited by:
  1. Henrekson, Magnus & Jakobsson, Ulf, 2011. "The Swedish Corporate Control Model: Convergence, Persistence or Decline?," Working Paper Series 857, Research Institute of Industrial Economics.
  2. Eklund, Johan E., 2007. "Corporate Governance and Investments in Scandinavia - ownership concentration and dual-class equity structure," Working Paper Series in Economics and Institutions of Innovation 98, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  3. Eklund, Johan & Palmberg, Johanna & Wiberg, Daniel, 2009. "Ownership Structure, Board Composition and Investment Performance," Working Paper Series in Economics and Institutions of Innovation 172, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  4. Högberg, Andreas, 2009. "INVESTMENT FOR GROWTH – a comparative study of firm performance in Scandinavia and South East Asia," Working Paper Series in Economics and Institutions of Innovation 208, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  5. Johan E. Eklund & Sameeksha Desai, 2008. "Ownership, Economic Entrenchment and Allocation of Capital," Jena Economic Research Papers 2008-012, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  6. Palmberg, Johanna, 2010. "Corporate Governance in the Swedish Banking Sector," Working Paper Series in Economics and Institutions of Innovation 226, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  7. Eklund, Johan E, 2009. "One Share – One Vote: new evidence from the Nordic countries," Working Paper Series in Economics and Institutions of Innovation 168, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
  8. Johanna Palmberg & Johan Eklund & Daniel Wiberg, 2011. "Family Ownership and Return on Investments – Founders, Heirs and External Managers," ERSA conference papers ersa10p1517, European Regional Science Association.
  9. Johan Eklund & Johanna Palmberg & Daniel Wiberg, 2013. "Inherited corporate control and returns on investment," Small Business Economics, Springer, vol. 41(2), pages 419-431, August.
  10. Eklund, Johan E. & Palmberg, Johanna & Wiberg, Daniel, 2010. "Family Ownership and Returns on Investment – Founders, Heirs, and External Managers," Ratio Working Papers 148, The Ratio Institute.
  11. Fogel, Kathy S. & Lee, Kevin K. & Lee, Wayne Y. & Palmberg, Johanna, 2013. "Foreign Investors as Change Agents: The Swedish Firm Experience," Working Paper Series in Economics and Institutions of Innovation 311, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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