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Complex Ownership Structures and Corporate Valuations

  • Luc Laeven
  • Ross Levine

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.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 12675.

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Date of creation: Nov 2006
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Publication status: published as Luc Laeven & Ross Levine, 2008. "Complex Ownership Structures and Corporate Valuations," Review of Financial Studies, Oxford University Press for Society for Financial Studies, vol. 21(2), pages 579-604, April.
Handle: RePEc:nbr:nberwo:12675
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