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Regulation and the Ownership Structure of European Listed Firms

In: Global Corporate Governance

Author

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  • Marc Steffen Rapp
  • Oliver Trinchera

Abstract

In this paper, we explore an extensive panel data set covering more than 4,000 listed firms in 16 European countries to study the effects of shareholder protection on ownership structure and firm performance. We document a negative firm-level correlation between shareholder protection and ownership concentration. Differentiating between shareholder types, we find that this pattern is mainly driven by strategic investors. In contrast, we find a positive correlation between shareholder protection and block ownership of institutional investors, in particular when we restrict the analysis to independent institutional investors. Finally, we find that independent institutional investors are positively associated with firm valuation as measured by Tobin’s Q. The opposite applies for strategic investors. Overall, our results are consistent with the view that (i) high shareholder protection and (ii) limited ownership by strategic investors make small investors and investors interested in security returns more confident in their investments.

Suggested Citation

  • Marc Steffen Rapp & Oliver Trinchera, 2017. "Regulation and the Ownership Structure of European Listed Firms," Advances in Financial Economics, in: Global Corporate Governance, volume 19, pages 23-76, Emerald Group Publishing Limited.
    • Handle: RePEc:eme:afeczz:s1569-373220160000019003
    DOI: 10.1108/S1569-373220160000019003
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    Cited by:

    1. Gregorič, Aleksandra & Rapp, Marc Steffen & Requejo, Ignacio, 2022. "Listed family firms in Europe: Relevance, characteristics and performance," Studien, Stiftung Familienunternehmen / Foundation for Family Businesses, number 273172, June.

    More about this item

    Keywords

    Ownership structure; shareholder protection; institutional ownership; Europe; G20; G32; G38;
    All these keywords.

    JEL classification:

    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G38 - Financial Economics - - Corporate Finance and Governance - - - Government Policy and Regulation

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