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Empirical evidence of the value of monitoring in joint ownership

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  • Mantecon, Tomas
  • Liu, Ian
  • Gao, Fei

Abstract

Joint ownership of assets by two partners can have an adverse effect on the incentives to invest and can result in unstable and inefficient organizational structures. Control sharing, however, plays an important role in economic, political, and social institutions. There is scarce empirical evidence on the benefits of joint ownership in corporate finance. We analyze acquisitions of corporate assets by joint ventures to empirically ascertain the value of joint ownership in economic activities. The results indicate that firms experience significantly larger returns in joint acquisitions than in full-control acquisitions and that this difference is restricted to the sample of firms in which both partners share equal ownership in the target. These findings suggest that monitoring in joint ownership structures ameliorates the possibility of value-destroying corporate decisions.

Suggested Citation

  • Mantecon, Tomas & Liu, Ian & Gao, Fei, 2012. "Empirical evidence of the value of monitoring in joint ownership," Journal of Banking & Finance, Elsevier, vol. 36(4), pages 1045-1056.
  • Handle: RePEc:eee:jbfina:v:36:y:2012:i:4:p:1045-1056
    DOI: 10.1016/j.jbankfin.2011.10.019
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    Cited by:

    1. Chen, Jun & King, Tao-Hsien Dolly & Wen, Min-Ming, 2015. "Do joint ventures and strategic alliances create value for bondholders?," Journal of Banking & Finance, Elsevier, vol. 58(C), pages 247-267.
    2. Tomas Mantecon & Kyojik Song & Haowen Luo, 2016. "The Control and Performance of Joint Ventures," Financial Management, Financial Management Association International, vol. 45(2), pages 431-465, May.
    3. repec:eee:reveco:v:49:y:2017:i:c:p:515-535 is not listed on IDEAS

    More about this item

    Keywords

    Property rights; Joint ownership; Mergers and acquisitions; Joint ventures;

    JEL classification:

    • D23 - Microeconomics - - Production and Organizations - - - Organizational Behavior; Transaction Costs; Property Rights
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • L24 - Industrial Organization - - Firm Objectives, Organization, and Behavior - - - Contracting Out; Joint Ventures

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