Does Ownership Matter? Evidence from Changes in Institutional and Strategic Investors' Equity Holdings

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Does Ownership Matter? Evidence from Changes in Institutional and Strategic Investors' Equity Holdings

Author Info

Neumann, Robert (Department of Finance, Copenhagen Business School)
Voetmann, Torben (Department of Finance, Copenhagen Business School)

Additional information is available for the following registered author(s):

Torben Voetmann

Abstract

This paper analyzes the relationship between ownership structure and security

performance. We use a unique data set that includes all of the announcements of

changes in institutional and strategic investors' ownership in firms listed on the

Copenhagen Stock Exchange in 1997. Using a piecewise linear model, we find a

decrease in security performance after a threshold level of ownership. This indicates

the maximization of the instit utional and strategic investors' entrenchment benefits,

which result from actively exercising corporate governance. However, the choice of

cutoff points affects the estimation and the robustness is not convincing. The results

of analyzing changes in ownership structure reveal that the autocorrelation in security

returns contributes with more than half of the abnormal return. This reflects the

investors trading strategy: stocks that outperform (underperform) are sold (bought).

Overall, these results indicate that the literature may ove restimate corporate

governance as a value-added factor.

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Publisher Info
Paper provided by Copenhagen Business School, Department of Finance in its series Working Papers with number 1999-9.

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Length: 30 pages
Date of creation: 01 Aug 1999
Date of revision:
Handle: RePEc:hhs:cbsfin:1999_009

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Postal: Department of Finance, Copenhagen Business School, Solbjerg Plads 3, A5, DK-2000 Frederiksberg, Denmark
Phone: +45 3815 3815
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Web page: http://www.cbs.dk/departments/finance/
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Find related papers by JEL classification:
G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies
G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure

Cited by:
(explanations, 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.)

Rose, Caspar, 2002. "Impact of Takeover Defenses on Managerial Incentives," Working Papers 2002-5, Copenhagen Business School, Department of Finance. [Downloadable!]
Caspar Rose, 2002. "Corporate Financial Performance and the Use of Takeover Defenses," European Journal of Law and Economics, Springer, vol. 13(2), pages 91-112, March. [Downloadable!] (restricted)

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