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Complex Ownership Structures and Corporate Valuations

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  • Luc Laeven
  • Ross Levine

Abstract

The bulk of corporate governance theory examines the agency problems that arise from two extreme ownership structures: 100 percent small shareholders or one large, controlling owner combined with small shareholders. In this paper, we question the empirical validity of this dichotomy. In fact, one-third of publicly listed firms in Europe have multiple large owners, and the market value of firms with multiple blockholders differs from firms with a single large owner and from widely-held firms. Moreover, the relationship between corporate valuations and the distribution of cash-flow rights across multiple large owners is consistent with the predictions of recent theoretical models.

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Paper provided by International Monetary Fund in its series IMF Working Papers with number 07/140.

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Length: 37
Date of creation: 01 Jun 2007
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Handle: RePEc:imf:imfwpa:07/140

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