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Control Premiums and the Effectiveness of Corporate Governance Systems

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  • Alexander Dyck
  • Luigi Zingales

Abstract

This article summarizes the findings of the authors' study, published recently in the Journal of Finance, that use control premiums paid in large block sales to assess the quality of corporate governance systems. The authors report significant variation in such premiums, with countries like the U.S. and U.K. showing premiums of less than 10% while premiums for countries like Brazil running in excess of 60%. 2004 Morgan Stanley.

Suggested Citation

  • Alexander Dyck & Luigi Zingales, 2004. "Control Premiums and the Effectiveness of Corporate Governance Systems," Journal of Applied Corporate Finance, Morgan Stanley, vol. 16(2-3), pages 51-72.
  • Handle: RePEc:bla:jacrfn:v:16:y:2004:i:2-3:p:51-72
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    References listed on IDEAS

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    1. Doidge, Craig & Karolyi, G. Andrew & Stulz, Rene M., 2004. "Why are foreign firms listed in the U.S. worth more?," Journal of Financial Economics, Elsevier, vol. 71(2), pages 205-238, February.
    2. Lucian Arye Bebchuk, 1999. "A Rent-Protection Theory of Corporate Ownership and Control," NBER Working Papers 7203, National Bureau of Economic Research, Inc.
    3. Boris Pleskovic & Joseph E. Stiglitz, 2000. "Annual World Bank Conference on Development Economics 1999," World Bank Publications, The World Bank, number 13839.
    4. Stulz, Rene M. & Williamson, Rohan, 2003. "Culture, openness, and finance," Journal of Financial Economics, Elsevier, vol. 70(3), pages 313-349, December.
    5. Reese, William Jr. & Weisbach, Michael S., 2002. "Protection of minority shareholder interests, cross-listings in the United States, and subsequent equity offerings," Journal of Financial Economics, Elsevier, vol. 66(1), pages 65-104, October.
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    Cited by:

    1. Rashid Ameer, 2012. "Impact of cash holdings and ownership concentration on firm valuation: Empirical evidence from Australia," Review of Accounting and Finance, Emerald Group Publishing, vol. 11(4), pages 448-467, October.
    2. repec:dau:papers:123456789/3862 is not listed on IDEAS
    3. Hegde, Shantaram P. & Mishra, Dev R., 2017. "Strategic risk-taking and value creation: Evidence from the market for corporate control," International Review of Economics & Finance, Elsevier, vol. 48(C), pages 212-234.
    4. Attig, Najah & Guedhami, Omrane & Mishra, Dev, 2008. "Multiple large shareholders, control contests, and implied cost of equity," Journal of Corporate Finance, Elsevier, vol. 14(5), pages 721-737, December.
    5. Luo, Qi & Li, Hui & Zhang, Biao, 2015. "Financing constraints and the cost of equity: Evidence on the moral hazard of the controlling shareholder," International Review of Economics & Finance, Elsevier, vol. 36(C), pages 99-106.
    6. Fu, Richard & Subramanian, Ajay, 2011. "Leverage and debt maturity choices by undiversified owner-managers," Journal of Corporate Finance, Elsevier, vol. 17(4), pages 888-913, September.

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