Bjuggren, Per-Olof () (Jönköping International Business School) Eklund, Johan () (Jönköping International Business School) Wiberg, Daniel () (Jönköping International Business School)
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This paper contributes to the literature on ownership, control and performance by exploring these relationships for Swedish listed companies (1997-2002). We find that firms, on average, are making inferior investment decisions and that the use of dual-class shares have a negative effect on performance. According to our results concentration of ownership has a negative impact on investment performance and firm value when control instruments that separate votes from capital share are used. Marginal q is used as a measure of economic performance. It was presented in an article by Mueller and Reardon in 1993 and has recently been used in empirical studies of ownership and performance by among others Gugler and Yurtoglu (2003). Frequently Tobin’s q is used in studies of this type, but Tobin’s q has a number of disadvantages which can be circumvented by employing a marginal q. This study adds to earlier studies by investigating how the separation of vote and capital shares’ creates a wedge between the incentives and the ability to pursue value maximization. The relationships between the performance measure and different ownership characteristics like ownership concentration and foreign ownership are also investigated.
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Paper provided by The Ratio Institute in its series Ratio Working Papers with number
71.
Length: 18 pages Date of creation: 27 Oct 2005 Date of revision: Handle: RePEc:hhs:ratioi:0071
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Find related papers by JEL classification: C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data D21 - Microeconomics - - Production and Organizations - - - Firm Behavior G30 - Financial Economics - - Corporate Finance and Governance - - - General K22 - Law and Economics - - Regulation and Business Law - - - Corporation and Securities Law L20 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - General
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