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Private benefits extraction in closely-held corporations: the case for multiple large shareholders

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  • Tribo Gine, José Antonio
  • Gutiérrez Calderón, María Isabel

Abstract

This paper investigates how multiple large shareholders share control and extract private benefits in closely-held corporations. We find that ownership structures with multiple large shareholders are common and very stable. Moreover, they seem to be, to a large extent, exogenously given. The structure of the controlling group of shareholders has a very significant impact on performance. Performance improves as the control group's ownership stake increases and, for a given ownership stake, as the number of members increases. The economic significance of the effects indicates that minority expropriation is a very important problem in closely-held firms.

Suggested Citation

  • Tribo Gine, José Antonio & Gutiérrez Calderón, María Isabel, 2004. "Private benefits extraction in closely-held corporations: the case for multiple large shareholders," DEE - Working Papers. Business Economics. WB wb044315, Universidad Carlos III de Madrid. Departamento de Economía de la Empresa.
  • Handle: RePEc:cte:wbrepe:wb044315
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    References listed on IDEAS

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    8. Jeffrey Zwiebel, 1995. "Block Investment and Partial Benefits of Corporate Control," Review of Economic Studies, Oxford University Press, vol. 62(2), pages 161-185.
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    13. Larry H. P. Lang & Mara Faccio & Leslie Young, 2001. "Dividends and Expropriation," American Economic Review, American Economic Association, vol. 91(1), pages 54-78, March.
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    Cited by:

    1. Sabri Boubaker & Hind Sami, 2011. "Multiple large shareholders and earnings informativeness," Review of Accounting and Finance, Emerald Group Publishing, vol. 10(3), pages 246-266, August.
    2. Sacristán-Navarro, María & Gómez-Ansón, Silvia & Cabeza-García, Laura, 2011. "Large shareholders' combinations in family firms: Prevalence and performance effects," Journal of Family Business Strategy, Elsevier, vol. 2(2), pages 101-112, June.
    3. Ruiz-Mallorquí, María Victoria & Santana-Martín, Domingo J., 2011. "Dominant institutional owners and firm value," Journal of Banking & Finance, Elsevier, vol. 35(1), pages 118-129, January.
    4. Fortich, Roberto & Gutiérrez, Luis & Pombo, Carlos, 2008. "Board structure and firm performance: evidence from Colombia," Galeras. Working Papers Series 019, Universidad de Los Andes. Facultad de Administración. School of Management.
    5. Azofra, Valentín & Santamaría, Marcos, 2011. "Ownership, control, and pyramids in Spanish commercial banks," Journal of Banking & Finance, Elsevier, vol. 35(6), pages 1464-1476, June.
    6. repec:dau:papers:123456789/3031 is not listed on IDEAS
    7. repec:dau:papers:123456789/2940 is not listed on IDEAS
    8. Jun Xie & Xiaotao Zeng, 2010. "Does the balance of power among block shareholders have impact on top management turnover?: An empirical study of listed firms in China," China Finance Review International, Emerald Group Publishing, vol. 1(1), pages 98-113, October.
    9. Gutiérrez, Luis H. & Pombo, Carlos, 2009. "Corporate ownership and control contestability in emerging markets: The case of Colombia," Journal of Economics and Business, Elsevier, vol. 61(2), pages 112-139.
    10. Dhillon, Amrita & Rossetto, Silvia, 2009. "Corporate Control and Multiple Large Shareholders," The Warwick Economics Research Paper Series (TWERPS) 891, University of Warwick, Department of Economics.

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