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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". Copyright Blackwell Publishing Ltd 2005.
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  • 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 and Journal Articles 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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    References listed on IDEAS

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    More about this item

    Keywords

    transition economies; budapest; stock exchange; corporate governance; global issues;

    JEL classification:

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

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