Equity Block Transfers in Transition Economies: Evidence from Poland
AbstractThis Paper investigates valuation effects of share block transfers and employs agency theory to explain the determinants of block premia. A sample of transactions from Poland is used to measure benefits and costs of ownership concentration. Block premia are found to be substantially lower than in well-developed markets, in spite of the insufficient minority shareholders’ protection in transitional economies. Shareholder’s opportunities to extract private benefits of control turn out to depend not only on the size of equity stake, but also on the relative power of other block holders. The expropriation threat appears to be most severe in the companies where the free float constitutes a substantial fraction of the shares outstanding. Moreover, the analysis reveals that liquidity costs considerably influence the level of block premia in Poland. Finally, the results document a positive role of the state as an institutional investor in listed companies.
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Bibliographic InfoPaper provided by C.E.P.R. Discussion Papers in its series CEPR Discussion Papers with number 3280.
Date of creation: Mar 2002
Date of revision:
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Find related papers by JEL classification:
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- G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
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- NEP-ALL-2003-03-14 (All new papers)
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