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Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: do too many cooks spoil the goulash?

Author

Listed:
  • John S. Earle

    (Upjohn Institute for Employment Research, Central European University.)

  • Csaba Kucsera

    (Loránd Eötvös University)

  • Álmos Telegdy

    (CEU and the Economics Institute of the Hungarian Academy of Sciences.)

Abstract

We examine the impact of ownership concentration on firm performance using panel data for firms listed on the Budapest Stock Exchange, where ownership tends to be highly concentrated and frequently involves multiple blocks. Fixed-effects estimates imply that the size of the largest block increases profitability and efficiency strongly and monotonically, but the effects of total blockholdings are much smaller and statistically insignificant. Controlling for the size of the largest block, point estimates of the marginal effects of additional blocks are negative. The results suggest that the marginal costs of concentration may outweigh the benefits when the increased concentration involves "too many cooks". Copyright Blackwell Publishing Ltd 2005.

Suggested Citation

  • John S. Earle & Csaba Kucsera & Álmos Telegdy, 2005. "Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: do too many cooks spoil the goulash?," Corporate Governance: An International Review, Wiley Blackwell, vol. 13(2), pages 254-264, March.
  • Handle: RePEc:bla:corgov:v:13:y:2005:i:2:p:254-264
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    References listed on IDEAS

    as
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    More about this item

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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