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Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: Do Too Many Cooks Spoil the Goulash?

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Abstract

We examine the impact of ownership concentration on firm performance using panel data for firms listed on the Budapest Stock Exchange, where ownership tends to be highly concentrated and frequently involves multiple blocks. Fixed‐effects estimates imply that the size of the largest block increases profitability and efficiency strongly and monotonically, but the effects of total blockholdings are much smaller and statistically insignificant. Controlling for the size of the largest block, point estimates of the marginal effects of additional blocks are negative. The results suggest that the marginal costs of concentration may outweigh the benefits when the increased concentration involves “too many cooks”.
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Suggested Citation

  • John S. Earle & Csaba Kucsera & Almos Telegdy, "undated". "Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: Do Too Many Cooks Spoil the Goulash?," Upjohn Working Papers jse20053, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:jse20053
    Note: Appears in Corporate Governance: An International Review 13(2): 254-264
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    File URL: http://onlinelibrary.wiley.com/doi/10.1111/j.1467-8683.2005.00420.x/abstract
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    JEL classification:

    • P2 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies
    • P3 - Political Economy and Comparative Economic Systems - - Socialist Institutions and Their Transitions

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