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Ownership Concentration and Share Valuation: Evidence from Germany

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  • Jeremy Edwards
  • Alfons J. Weichenrieder
  • Alfons Weichenrieder

Abstract

Concentrated ownership of large listed companies is widespread throughout the world, and Germany is typical in this respect. This paper proposes a method of distinguishing empirically between the beneficial and harmful effects of ownership concentration, and applies it to German data. The results show that, for most types of largest shareholder, the beneficial effects on minority shareholders of increased ownership (greater monitoring of management, and reduced incentives to exploit minority shareholders due to greater cash-flow rights) outweigh the harmful effect (greater private benefits of control due to greater control rights).

Suggested Citation

  • Jeremy Edwards & Alfons J. Weichenrieder & Alfons Weichenrieder, 1999. "Ownership Concentration and Share Valuation: Evidence from Germany," CESifo Working Paper Series 193, CESifo.
    • Handle: RePEc:ces:ceswps:_193
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    References listed on IDEAS

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    Cited by:

    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. Franks, Julian & Mayer, Colin, 2001. "Ownership and Control of German Corporations," Review of Financial Studies, Society for Financial Studies, vol. 14(4), pages 943-977.
    3. Jara-Bertin, Mauricio & López-Iturriaga, Félix J., 2008. "Earnings Management and Contest to the Control: An Analysis of European Family Firms," MPRA Paper 9660, University Library of Munich, Germany.
    4. Konstantin Gluschenko, 2004. "Analysing changes in market integration through a cross-sectional test for the law of one price," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 9(2), pages 135-149.
    5. Timofeev Andrey, 2002. "Fiscal Decentralization and Soft Budget Constraints," EERC Working Paper Series 01-12e, EERC Research Network, Russia and CIS.
    6. Johnson Simon, 2002. "Coase and the Reform of Securities Markets," International Economic Journal, Taylor & Francis Journals, vol. 16(1), pages 1-19.
    7. Kuznetsov, Pavel & Muravyev, Alexander, 2001. "Ownership Structure and Firm Performance in Russia: The Case of Blue Chips of the Stock Market," MPRA Paper 27231, University Library of Munich, Germany.
    8. Yoshiro Miwa & J. Mark Ramseyer, 2003. "Does Ownership Matter? Evidence from the Zaibatsu Dissolution Program," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 12(1), pages 67-89, March.
    9. Marc Goergen & Miguel Manjon & Luc Renneboog, 2008. "Is the German system of corporate governance converging towards the Anglo-American model?," Journal of Management & Governance, Springer;Accademia Italiana di Economia Aziendale (AIDEA), vol. 12(1), pages 37-71, March.
    10. Gugler, Klaus & Yurtoglu, B. Burcin, 2003. "Corporate governance and dividend pay-out policy in Germany," European Economic Review, Elsevier, vol. 47(4), pages 731-758, August.
    11. Simon Johnson & Andrei Shleifer, 2000. "Coase And Corporate Governance In Latin America," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 2(2), pages 113-131.
    12. Julien Le Maux, 2003. "Les bénéfices privés:une rupture de l'égalité entre actionnaires," Revue Finance Contrôle Stratégie, revues.org, vol. 6(1), pages 63-92, March.

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    Keywords

    Ownership structure; firm performance;

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