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Does stable ownership create value? Evidence from the global financial crisis

Author

Listed:
  • Andy Lardon
  • Christof Beuselinck

    (LEM - Lille - Economie et Management - Université de Lille, Sciences et Technologies - CNRS - Centre National de la Recherche Scientifique, LEM - Lille économie management - UMR 9221 - UA - Université d'Artois - UCL - Université catholique de Lille - ULCO - Université du Littoral Côte d'Opale - Université de Lille - CNRS - Centre National de la Recherche Scientifique)

  • Marc Deloof

    (Antwerp Management School)

Abstract

We investigate the value of stable ownership for a sample of European firms using the global financial crisis as an exogenous shock and pre-and post-crisis years as benchmark periods. Consistent with the argument that stable ownership allows managers to focus on the creation of long-term value, we find that stable ownership resulted in higher stock returns and a higher market-to-book ratio during the crisis. This positive effect of stable ownership was not reversed after the crisis. Stable institutional blockholdings were more valuable in countries with weaker investor protection. However, the positive effect does not apply to firms in which a family is the largest blockholder. Finally, we also find that ownership stability was associated with a higher level of investments, illustrating that stable ownership affects real corporate decisions.

Suggested Citation

  • Andy Lardon & Christof Beuselinck & Marc Deloof, 2019. "Does stable ownership create value? Evidence from the global financial crisis," Post-Print hal-02111442, HAL.
    • Handle: RePEc:hal:journl:hal-02111442
    DOI: 10.1007/s11156-018-0719-4
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    Cited by:

    1. Maria Boutchkova & Diego Cueto & Angelica Gonzalez, 2022. "Test power properties of within-firm estimators of ownership and board-related explanatory variables with low time variation," Review of Quantitative Finance and Accounting, Springer, vol. 59(3), pages 1215-1269, October.

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    Keywords

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    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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