Ownership Structure and Value of the Largest European Firms: The Importance of Owner Identity |
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Authors: | Pedersen Torben Thomsen Steen |
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Affiliation: | (1) Department of International, Economics and Management, Copenhagen Business School, Howitzvej 60, 2000 Copenhagen F., Denmark |
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Abstract: | The paper examines the relationship betweenownership structure and value of the largestEuropean firms. Using simultaneous estimationand controlling for nation and industry effectswe find that ownership concentration (measuredby the fraction of ``closely held' shares) hasa positive effect on firm value (market-to-bookvalue of equity), when the largest owner is afinancial institution or another corporation. If the largest owner is a family or a singleindividual, ownership concentration has noeffect on firm value, and the effect isnegative if the largest owner is a governmentorganisation. Firm value is found to have apositive feedback effect on ownershipconcentration except for governments, whichhold higher stakes in low-value firms. Inother words, owner-identity matters,particularly in a Continental Europeaninstitutional setting where ownershipconcentration is high and minority investorprotection is low. |
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Keywords: | firm value owner identity ownership structure performance |
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