IDEAS home Printed from https://ideas.repec.org/p/hhs/cbsnow/2000_016.html
   My bibliography  Save this paper

Control Dilution And Distribution Of Ownership

Author

Listed:
  • Bennedsen, Morten

    (Department of Economics, Copenhagen Business School)

  • Fosgerau, Mogens

    (Center for Economics and Business Research)

  • Wolfenzon, Daniel

    (Michigan Business School)

Abstract

We investigate the patterns of ultimate distribution of ownership in a sample of small closely held corporations. Motivated by recent corporate governance theories we define control dilution as the absenc of a single dominating shareholder. Most firms have one or two ultimate owners implying that control is very concentrated. However, we find strong evidence for control dilution in firms with multiple owners and we proceed to analyze three potential explanations: a general strategic motive, a coalition formation argument and the presence of family ownership. We find the strongest evidence for a general strategic motive and we clearly reject that the observed control dilution is due to family ownership. Finally, we show that the probability of control dilution increases with manager ownership and number of owners, but decreases with the age of the firm and with the presence of family ownership.

Suggested Citation

  • Bennedsen, Morten & Fosgerau, Mogens & Wolfenzon, Daniel, 2000. "Control Dilution And Distribution Of Ownership," Working Papers 16-2000, Copenhagen Business School, Department of Economics.
  • Handle: RePEc:hhs:cbsnow:2000_016
    as

    Download full text from publisher

    File URL: http://openarchive.cbs.dk/cbsweb/handle/10398/7614
    Download Restriction: no

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Elisabeth Mueller & Alexandra Spitz-Oener, 2006. "Managerial Ownership and Company Performance in German Small and Medium-Sized Private Enterprises," German Economic Review, Verein für Socialpolitik, vol. 7, pages 233-247, May.
    2. Mueller, Elisabeth & Spitz, Alexandra, 2001. "Managerial ownership and firm performance in German small and medium-sized enterprises," ZEW Discussion Papers 01-72, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.

    More about this item

    Keywords

    Ownership Distribution; Control Allocation; Closely Held Corporations;

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

    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:hhs:cbsnow:2000_016. 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: (Lars Nondal). General contact details of provider: http://edirc.repec.org/data/incbsdk.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.