IDEAS home Printed from https://ideas.repec.org/a/taf/ijecbs/v6y1999i3p367-381.html
   My bibliography  Save this article

Economic and Systemic Explanations of Ownership Concentration among Europe's Largest Companies

Author

Listed:
  • Torben Pedersen
  • Steen Thomsen

Abstract

The paper examines causes and effects of ownership concentration among the largest companies in 12 European countries. As a reference point the paper takes a seminal empirical study on US data and examines to what extent the model is applicable in European countries. The findings indicate that both general economic effects and system effects are significant. Ownership concentration is found to decrease with firm size and to increase with earnings volatility. But in support of the system theories advocated nationality is also found to have a significant effect which is partly attributable to institutional differences between nations such as stock market size and the frequency of large banks. Finally ownership concentration is found to have an insignificant effect on accounting profitability (return on equity)

Suggested Citation

  • Torben Pedersen & Steen Thomsen, 1999. "Economic and Systemic Explanations of Ownership Concentration among Europe's Largest Companies," International Journal of the Economics of Business, Taylor & Francis Journals, vol. 6(3), pages 367-381.
    • Handle: RePEc:taf:ijecbs:v:6:y:1999:i:3:p:367-381
    DOI: 10.1080/13571519984133
    as

    Download full text from publisher

    File URL: http://www.tandfonline.com/10.1080/13571519984133
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/13571519984133?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. 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 327-349, June.
    2. Kaplan, Steven N, 1994. "Top Executives, Turnover, and Firm Performance in Germany," The Journal of Law, Economics, and Organization, Oxford University Press, vol. 10(1), pages 142-159, April.
    3. Stulz, ReneM., 1988. "Managerial control of voting rights : Financing policies and the market for corporate control," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 25-54, January.
    4. Shleifer, Andrei & Vishny, Robert W, 1997. "A Survey of Corporate Governance," Journal of Finance, American Finance Association, vol. 52(2), pages 737-783, June.
    5. Shleifer, Andrei & Vishny, Robert W, 1986. "Large Shareholders and Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 94(3), pages 461-488, June.
    6. 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.
    7. Kaplan, Steven N, 1994. "Top Executive Rewards and Firm Performance: A Comparison of Japan and the United States," Journal of Political Economy, University of Chicago Press, vol. 102(3), pages 510-546, June.
    8. Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation," Scholarly Articles 29407535, Harvard University Department of Economics.
    9. Leech, Dennis & Leahy, John, 1991. "Ownership Structure, Control Type Classifications and the Performance of Large British Companies," Economic Journal, Royal Economic Society, vol. 101(409), pages 1418-1437, November.
    10. Richard J. Zeckhauser & John Pound, 1990. "Are Large Shareholders Effective Monitors? An Investigation of Share Ownership and Corporate Performance," NBER Chapters, in: Asymmetric Information, Corporate Finance, and Investment, pages 149-180, National Bureau of Economic Research, Inc.
    11. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    12. 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.
    13. Holderness, Clifford G. & Sheehan, Dennis P., 1988. "The role of majority shareholders in publicly held corporations : An exploratory analysis," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 317-346, January.
    14. Short, Helen, 1994. "Ownership, Control, Financial Structure and the Performance of Firms," Journal of Economic Surveys, Wiley Blackwell, vol. 8(3), pages 203-249, September.
    15. 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 1155-1177, December.
    16. Lloyd, William P. & Modani, Naval K. & Hand, John H., 1987. "The effect of the degree of ownership control on firm diversification, market value, and merger activity," Journal of Business Research, Elsevier, vol. 15(4), pages 303-312, August.
    17. Jos Gerson & Graham Barr, 1996. "The Structure of Corporate Control and Ownership in a Regulatory Environment Unbiased toward One‐Share‐One‐Vote," Corporate Governance: An International Review, Wiley Blackwell, vol. 4(2), pages 78-97, April.
    18. Cho, Myeong-Hyeon, 1998. "Ownership structure, investment, and the corporate value: an empirical analysis," Journal of Financial Economics, Elsevier, vol. 47(1), pages 103-121, January.
    19. Morck, Randall & Shleifer, Andrei & Vishny, Robert W., 1988. "Management ownership and market valuation : An empirical analysis," Journal of Financial Economics, Elsevier, vol. 20(1-2), pages 293-315, January.
    20. Bergstrom, Clas & Rydqvist, Kristian, 1990. "The determinants of corporate ownership : An empirical study on Swedish data," Journal of Banking & Finance, Elsevier, vol. 14(2-3), pages 237-253, August.
    21. R. Joseph Monsen & John S. Chitj & David E. Cooley, 1968. "The Effect of Separation of Ownership and Control on the Performance of the Large Firm," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 82(3), pages 435-451.
    22. Thomsen, Steen & Pedersen, Torben, 1998. "Industry and ownership structure," International Review of Law and Economics, Elsevier, vol. 18(4), pages 385-402, December.
    23. Cubbin, John S & Leech, Dennis, 1983. "The Effect of Shareholding Dispersion on the Degree of Control in British Companies: Theory and Measurement," Economic Journal, Royal Economic Society, vol. 93(37), pages 351-369, June.
    24. Demsetz, Harold, 1983. "The Structure of Ownership and the Theory of the Firm," Journal of Law and Economics, University of Chicago Press, vol. 26(2), pages 375-390, June.
    25. Torben Pedersen & Steen Thomsen, 1997. "European Patterns of Corporate Ownership: A Twelve-Country Study," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 28(4), pages 759-778, December.
    26. Mayer, Colin, 1997. "The City and Corporate Performance: Condemned or Exonerated?," Cambridge Journal of Economics, Cambridge Political Economy Society, vol. 21(2), pages 291-302, March.
    27. Nickell, Stephen & Nicolitsas, Daphne & Dryden, Neil, 1997. "What makes firms perform well?," European Economic Review, Elsevier, vol. 41(3-5), pages 783-796, April.
    28. Rydqvist, Kristian, 1992. "Dual-Class Shares: A Review," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 8(3), pages 45-57, Autumn.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Christian Weiss & Stefan Hilger, 2012. "Ownership concentration beyond good and evil: is there an effect on corporate performance?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 16(4), pages 727-752, November.
    2. Pedersen, Torben & Thomsen, Steen & Kvist, Hans Kurt, 2001. "The Direction of Causality Between Blockholder Ownership and Firm Value: US and EU Evidence," Working Papers 16-2001, Copenhagen Business School, Department of International Economics and Management.
    3. Elosge, Corinna & Oesterle, Michael-Joerg & Stein, Christina M. & Hattula, Stefan, 2018. "CEO succession and firms’ internationalization processes: Insights from German companies," International Business Review, Elsevier, vol. 27(2), pages 367-379.
    4. Fan, Di & Lo, Chris K.Y. & Yeung, Andy C.L. & Cheng, T.C.E., 2018. "The impact of corporate label change on long-term labor productivity," Journal of Business Research, Elsevier, vol. 86(C), pages 96-108.
    5. Thomsen, Steen & Pedersen, Torben & Kvist, Hans Kurt, 2006. "Blockholder ownership: Effects on firm value in market and control based governance systems," Journal of Corporate Finance, Elsevier, vol. 12(2), pages 246-269, January.
    6. Lai, Shaojie & Liang, Hongyan & Liu, Zilong & Pu, Xiaoling & Zhang, Jianing, 2022. "Ownership concentration among entrepreneurial firms: The growth-control trade-off," International Review of Economics & Finance, Elsevier, vol. 78(C), pages 122-140.
    7. Herstad , Sverre J. & Sandven , Tore, 2015. "Innovation and corporate employment growth revisited," Papers in Innovation Studies 2015/3, Lund University, CIRCLE - Centre for Innovation Research.
    8. Cabeza-García, Laura & Gómez-Ansón, Silvia, 2011. "Post-privatisation ownership concentration: Determinants and influence on firm efficiency," Journal of Comparative Economics, Elsevier, vol. 39(3), pages 412-430, September.
    9. Sverre Herstad, 2011. "Paradigms, Regimes and the Shifting Notions of Institutional Best Practice," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 2(2), pages 173-191, June.
    10. Nahila Nazir & Amarjeet Kaur Malhotra, 2016. "The Effect of Ownership Structure on Firm Profitability in India: A Panel Data Approach," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 8(6), pages 237-237, June.
    11. Slangen, Arjen & Hennart, Jean-François, 2007. "Greenfield or acquisition entry: A review of the empirical foreign establishment mode literature," Journal of International Management, Elsevier, vol. 13(4), pages 403-429, December.
    12. Pedersen, Torben & Thomsen, Steen, 2001. "The Causal Relationship between Insider Ownership, Owner Identity and Market Valuation among the Largest European Companies," Working Papers 15-2001, Copenhagen Business School, Department of International Economics and Management.
    13. Liu, Yi & Li, Yuan & Xue, Jiaqi, 2011. "Ownership, strategic orientation and internationalization in emerging markets," Journal of World Business, Elsevier, vol. 46(3), pages 381-393, July.
    14. Weiß, Christian, 2010. "The Ownership Concentration of Firms: Three Essays on the Determinants and Effects," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 30247, July.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Goergen, Marc & Manjon, Miguel C. & Renneboog, Luc, 2008. "Recent developments in German corporate governance," International Review of Law and Economics, Elsevier, vol. 28(3), pages 175-193, September.
    2. Weiß, Christian, 2010. "The Ownership Concentration of Firms: Three Essays on the Determinants and Effects," EconStor Theses, ZBW - Leibniz Information Centre for Economics, number 30247, July.
    3. Pedersen, Torben & Thomsen, Steen & Kvist, Hans Kurt, 2001. "The Direction of Causality Between Blockholder Ownership and Firm Value: US and EU Evidence," Working Papers 16-2001, Copenhagen Business School, Department of International Economics and Management.
    4. Thomsen, Steen & Pedersen, Torben & Kvist, Hans Kurt, 2006. "Blockholder ownership: Effects on firm value in market and control based governance systems," Journal of Corporate Finance, Elsevier, vol. 12(2), pages 246-269, January.
    5. Axel Börsch‐Supan & Jens Köke, 2002. "An Applied Econometricians' View of Empirical Corporate Governance Studies," German Economic Review, Verein für Socialpolitik, vol. 3(3), pages 295-326, August.
    6. Börsch-Supan, Axel & Köke, Jens, 2000. "An applied econometricians' view of empirical corporate governance studies," ZEW Discussion Papers 00-17, ZEW - Leibniz Centre for European Economic Research.
    7. Pradiptarathi PANDA & Jinesh PANCHALI, 2019. "Corporate ownership structure and performance: An enquiry into India," Theoretical and Applied Economics, Asociatia Generala a Economistilor din Romania - AGER, vol. 0(4(621), W), pages 93-110, Winter.
    8. Pedersen, Torben & Thomsen, Steen, 2001. "The Causal Relationship between Insider Ownership, Owner Identity and Market Valuation among the Largest European Companies," Working Papers 15-2001, Copenhagen Business School, Department of International Economics and Management.
    9. repec:agr:journl:v:4(621):y:2019:i:4(621):p:93-110 is not listed on IDEAS
    10. Christian Weiss & Stefan Hilger, 2012. "Ownership concentration beyond good and evil: is there an effect on corporate performance?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 16(4), pages 727-752, November.
    11. Attiya Y. Javid & Robina Iqbal, 2010. "Corporate Governance in Pakistan : Corporate Valuation, Ownership and Financing," Governance Working Papers 22830, East Asian Bureau of Economic Research.
    12. Arosa, Blanca & Iturralde, Txomin & Maseda, Amaia, 2010. "Ownership structure and firm performance in non-listed firms: Evidence from Spain," Journal of Family Business Strategy, Elsevier, vol. 1(2), pages 88-96, June.
    13. Yeddou, Nacera & Pourroy, Marc, 2020. "Bank liquidity creation: Does ownership structure matter?," The Quarterly Review of Economics and Finance, Elsevier, vol. 78(C), pages 116-131.
    14. Khosa,Amrinder & Ahmed,Kamran & Henry,Darren, 2019. "Ownership Structure, Related Party Transactions, and Firm Valuation," Cambridge Books, Cambridge University Press, number 9781108492195.
    15. G.A. Karathanassis & A.A. Drakos, 2004. "A note on equity ownership and corporate value in Greece," Managerial and Decision Economics, John Wiley & Sons, Ltd., vol. 25(8), pages 537-547.
    16. Hussein Abedi Shamsabadi & Byung-Seong Min & Richard Chung, 2016. "Corporate governance and dividend strategy: lessons from Australia," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 12(5), pages 583-610, October.
    17. Stavros E. Arvanitis & Theodoros V. Stamatopoulos & Dimitris Terzakis, 2018. "Is There a Non-linear Relationship of Market Value with Cash and Ownership?," SPOUDAI Journal of Economics and Business, SPOUDAI Journal of Economics and Business, University of Piraeus, vol. 68(1), pages 3-25, January-M.
    18. Zeineb Barka & Taher Hamza, 2020. "The effect of large controlling shareholders on equity prices in France: monitoring or entrenchment?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 24(3), pages 769-798, September.
    19. Grosfeld, Irena, 2009. "Large shareholders and firm value: Are high-tech firms different?," Economic Systems, Elsevier, vol. 33(3), pages 259-277, September.
    20. Wiem Elmanaa Madani & Wafa Khlif, 2005. "Effets De La Structure De Propriete Sur La Performance Comptable : Etude Empirique Sur Les Entreprises Tunisiennes Indistruelles Non Cotees," Post-Print halshs-00581192, HAL.
    21. John S. Earle, 1999. "Post-Privatisation Ownership Structure and Productivity in Russian Industrial Enterprises," Working Papers 1999.19, Fondazione Eni Enrico Mattei.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:ijecbs:v:6:y:1999:i:3:p:367-381. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CIJB20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.