IDEAS home Printed from https://ideas.repec.org/p/ant/wpaper/2004007.html
   My bibliography  Save this paper

Why do holding companies in pyramidal groups trade at a discount?

Author

Listed:
  • ROMMENS, An
  • DELOOF, Marc
  • JEGERS, Marc

Abstract

Holding companies, which play an important role in corporate finance in Belgium and in other Continental European countries, often trade at a discount to their estimated net asset value (NAV). First, we discuss possible explanations for this discount: holding company destroys value, NAV overestimates actual value, noise traders cause underpricing, and private benefits of control. Second, we investigate the discount of the Belgian holding company Cobepa, for which detailed information on the calculation of the NAV was available. We can exclude the first three explanations for the Cobepa case, we cannot rule out private benefits as an explanation.

Suggested Citation

  • ROMMENS, An & DELOOF, Marc & JEGERS, Marc, 2004. "Why do holding companies in pyramidal groups trade at a discount?," Working Papers 2004007, University of Antwerp, Faculty of Applied Economics.
  • Handle: RePEc:ant:wpaper:2004007
    as

    Download full text from publisher

    File URL: https://repository.uantwerpen.be/docman/irua/8bfe33/5818b8e1.pdf
    Download Restriction: no

    More about this item

    Keywords

    Holding companies; Closed-end fund discount; Pyramidal groups; Private benefits; Clinical study;

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ant:wpaper:2004007. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Joeri Nys). General contact details of provider: http://edirc.repec.org/data/ftufsbe.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.