The initial view of the advantages of ownership concentration in joint stock companies was determined by the concern about the opportunistic managerial behavior. The growing importance of knowledge and human capital in the operation of firms shifts the focus of concern: excessive ownership concentration may stifle managerial initiative. This may be particularly true, and the results obtained in this paper support this hypothesis, in firms with high share of knowledge related activities. I explore the determinants of ownership concentration and the relationship between ownership structure and firm value in the context of a transition economy, i.e. an economy undergoing important changes in its legal and regulatory framework, in macroeconomic policy and most of all, in its property rights allocation. I focus on all non-financial companies traded on the Warsaw Stock Exchange since its inception in 1991 and up to 2003. We can observe that ownership of companies becomes more dispersed with the number of years of listing. The results reported in this paper suggest that firm adjust their ownership structure to firm specific characteristics and that firms belonging to the sector of high technology tend to have lower ownership concentration. However, the positive impact of ownership concentration on firm value detected in OLS regressions becomes even stronger when we control for the endogeneity of ownership.
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Length: pages Date of creation: 01 Jun 2006 Date of revision: Handle: RePEc:wdi:papers:2006-834
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Find related papers by JEL classification: D21 - Microeconomics - - Production and Organizations - - - Firm Behavior G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Capital and Ownership Structure P2 - Economic Systems - - Socialist Systems and Transition Economies P34 - Economic Systems - - Socialist Institutions and Their Transitions - - - Finance
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Shleifer, Andrei & Vishny, Robert W, 1997.
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Rafael La Porta & Florencio Lopez-De-Silanes & Andrei Shleifer, 1999.
"Corporate Ownership Around the World,"
Journal of Finance,
American Finance Association, vol. 54(2), pages 471-517, 04.
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