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Private Benefits: Ownership Versus Control

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  • Joon Ho Hwang
  • Bill Hu

Abstract

We empirically decompose private benefits into benefits accruing from ownership and benefits accruing from control. We document that private benefits increase slowly with respect to the ownership level but increase rapidly with respect to the blockholder's likelihood of exercising control. The decomposition of private benefits allows us to quantify the magnitude of nonpecuniary private benefits by examining the block premium when the blockholder's likelihood of exercising control is close to zero. We find that the size of nonpecuniary private benefits ranges from 0.61% to 5.92% of the share price, or 18% to 29% of the total private benefits.

Suggested Citation

  • Joon Ho Hwang & Bill Hu, 2009. "Private Benefits: Ownership Versus Control," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 32(4), pages 365-393, December.
    • Handle: RePEc:bla:jfnres:v:32:y:2009:i:4:p:365-393
    DOI: 10.1111/j.1475-6803.2009.01254.x
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    References listed on IDEAS

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