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One Share – One Vote: new evidence from the Nordic countries

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Author Info
Eklund, Johan E () (Ratio Institute, CESIS and JIBS)
Abstract

This paper examines how ownership concentration affects investment performance, and in particular how deviations from the one share-one vote principle affect this ownership-performance relationship. Using a unique panel from the Nordic countries the so-called incentive and managerial entrenchment effects are isolated. To this end a measure of marginal q is used to evaluate performance. This is a theoretically and empirically more appropriate measure of performance as compared to Tobin’s q. The main finding is that ownership concentration improves performance, whereas dual-class shares reduce the incentive effect and enhance the managerial entrenchment effect. On average, firms with dual-class shares over-invest.

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Publisher 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 168.

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Length: 31 pages
Date of creation: 28 Jan 2009
Date of revision:
Handle: RePEc:hhs:cesisp:0168

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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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Related research
Keywords: investment; marginal q; ownership concentration; one share-one vote;

Other versions of this item:

Find related papers by JEL classification:
C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data
G30 - Financial Economics - - Corporate Finance and Governance - - - General
L25 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Firm Performance

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  16. Faccio, Mara & Lang, Larry H. P., 2002. "The ultimate ownership of Western European corporations," Journal of Financial Economics, Elsevier, vol. 65(3), pages 365-395, September. [Downloadable!] (restricted)
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  19. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 110. [Downloadable!] (restricted)
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    Other versions:
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