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Complex Ownership Structures and Corporate Valuations

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  • Mr. Luc Laeven
  • Mr. Ross Levine

Abstract

The bulk of corporate governance theory examines the agency problems that arise from two extreme ownership structures: 100 percent small shareholders or one large, controlling owner combined with small shareholders. In this paper, we question the empirical validity of this dichotomy. In fact, one-third of publicly listed firms in Europe have multiple large owners, and the market value of firms with multiple blockholders differs from firms with a single large owner and from widely-held firms. Moreover, the relationship between corporate valuations and the distribution of cash-flow rights across multiple large owners is consistent with the predictions of recent theoretical models.

Suggested Citation

  • Mr. Luc Laeven & Mr. Ross Levine, 2007. "Complex Ownership Structures and Corporate Valuations," IMF Working Papers 2007/140, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2007/140
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    More about this item

    Keywords

    WP; cash-flow right; ownership structure; founding firm; cash-flow dispersion; firm c;
    All these keywords.

    JEL classification:

    • G3 - Financial Economics - - Corporate Finance and Governance
    • 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

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