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Corporate Governance and Investments in Scandinavia - ownership concentration and dual-class equity structure

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  • Eklund, Johan E.

    ()
    (JIBS and CESIS)

Abstract

Juridical-political theories suggest that legal origin (La Porta et al. (1997)) and political factors (Roe (2003)) matters for firm performance. In Scandinavia there are a number of legal practices, with common political roots, that impinge on the distribution of corporate control, which accordingly may affect firm performance. This paper examines the return on investments and the effects of ownership concentration in a large sample of listed Scandinavian firms. As a performance measure marginal q developed by Mueller and Reardon (1993) is used. Marginal q measures the marginal return on capital relative its cost of capital. This is a more appropriate measure of performance than Tobin’s average q. The question of how ownership concentration affects managerial investment decisions is examined. A Scandinavian corporate governance feature is the wide spread use of vote-differentiation. How deviations from the one-share-one-vote principle affects this ownership-performance relationship is analyzed.

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Bibliographic Info

Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 98.

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Length: 36 pages
Date of creation: 06 Sep 2007
Date of revision:
Handle: RePEc:hhs:cesisp:0098

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Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Phone: +46 8 790 95 63
Web page: http://www.infra.kth.se/cesis/
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Keywords: Investments; Marginal q; Corporate Governance; Ownership Concentration; Dual-Class Shares;

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  1. Andrei Shleifer & Robert W. Vishny, 1995. "A Survey of Corporate Governance," Harvard Institute of Economic Research Working Papers 1741, Harvard - Institute of Economic Research.
  2. Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," NBER Working Papers 5661, National Bureau of Economic Research, Inc.
  3. Per-Olof Bjuggren & Johan Eklund & Daniel Wiberg, 2007. "Ownership structure, control and firm performance: the effects of vote-differentiated shares," Applied Financial Economics, Taylor & Francis Journals, vol. 17(16), pages 1323-1334.
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  9. Bjuggren, Per-Olof & Wiberg, Daniel, 2005. "Industry Specific Effects in Investment Performance and Valuation of Firms - Marginal q in a Stock Market Bubble," Working Paper Series in Economics and Institutions of Innovation 45, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
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Cited by:
  1. Eklund, Johan & Desai, Sameeksha, 2008. "Ownership, Economic Entrenchment and Allocation of Capital," Working Paper Series in Economics and Institutions of Innovation 123, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.

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