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Benefits of Control, capital structure and company growth

  • Mueller, Elisabeth

This paper studies the influence of the benefits of control on the capital structure and the growth of private companies for a sample of 8,964 UK companies with limited liability observed for up to 5 years. It is hypothesised that companies in which existing owners would lose more control if they expanded, have smaller equity increases, are more highly levered and grow more slowly. Potential loss of control is measured as the difference in the probability of winning a vote for the largest owner before and after a hypothetical equity increase. Evidence is found that is consistent with the hypotheses.

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File URL: https://www.econstor.eu/bitstream/10419/24494/1/dp0555.pdf
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Paper provided by ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research in its series ZEW Discussion Papers with number 05-55 [rev.].

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Date of creation: 2005
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Handle: RePEc:zbw:zewdip:5429
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  18. Colin Wren, 2002. "Evaluating the effect of soft business support upon small firm performance," Oxford Economic Papers, Oxford University Press, vol. 54(2), pages 334-365, April.
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