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Ownership Concentration, Market Monitoring and Performance: Evidence from the UK, the Czech Republic and Poland

  • Vahe Lskavyan

    ()

  • Mariana Spatareanu

    ()

Using data for publicly traded companies from the UK and two transition countries, the Czech Republic and Poland, we analyze the relationship between ownership concentration and performance while also accounting for the effect of hostile takeover threats on this relationship. Some argue that ownership concentration will improve performance by making the owners more willing or able to monitor managers. Others argue that in the presence of efficient markets, market monitoring (via the threat of hostile takeovers) will discipline the managers. Our results show that concentration is insignificant in explaining performance both in the transition countries, where market monitoring is supposedly weak, and in the UK, where market monitoring is supposedly strong.

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Paper provided by Department of Economics, Rutgers University, Newark in its series Working Papers Rutgers University, Newark with number 2005-012.

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Length: 19 pages
Date of creation: Sep 2005
Date of revision:
Handle: RePEc:run:wpaper:2005-012
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  4. Claessens, Stijn & Djankov, Simeon, 1999. "Ownership Concentration and Corporate Performance in the Czech Republic," CEPR Discussion Papers 2145, C.E.P.R. Discussion Papers.
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  9. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 110.
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  16. Ravenscraft, David J & Scherer, F M, 1987. "Life after Takeover," Journal of Industrial Economics, Wiley Blackwell, vol. 36(2), pages 147-56, December.
  17. Burkart, Mike & Gromb, Denis & Panunzi, Fausto, 1997. "Large Shareholders, Monitoring, and the Value of the Firm," The Quarterly Journal of Economics, MIT Press, vol. 112(3), pages 693-728, August.
  18. International Monetary Fund, 2001. "Republic of Poland; Financial System Stability Assessment," IMF Staff Country Reports 01/67, International Monetary Fund.
  19. Henry G. Manne, 1965. "Mergers and the Market for Corporate Control," Journal of Political Economy, University of Chicago Press, vol. 73, pages 351.
  20. Jay Dahya & Ronan Powell, 1998. "Ownership Structure, Managerial Turnover and Takeovers: Further U.K. Evidence on the Market for Corporate Control," Multinational Finance Journal, Multinational Finance Journal, vol. 2(1), pages 62-83, March.
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