Incentive and Entrenchment Effects in European Ownership

Morten Bennedsen and Kasper Meisner Nielsen

No 2009-05, CEI Working Paper Series from Center for Economic Institutions, Institute of Economic Research, Hitotsubashi University

Abstract: In a large sample of European firms we analyze the value discount associated with disproportional ownership structures first documented by Claessens et al (2002). Consistent with a theoretical model of incentives and entrenchment effects, we find higher value discount in family firms, in firms with low cash flow concentration, and in industries with higher amenity value. Furthermore, the discount is higher in countries with good investor protection and higher for dual class shares than for pyramids. We find no impact on operating performance, likelihood of bankruptcy, dividend policy, or growth. Finally, we discuss policy implications of these findings.

Keywords: Ownership Structure; Dual Class Shares; Pyramids; EU Company Law (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 G38 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2009-11
New Economics Papers: this item is included in nep-bec, nep-eur and nep-reg
Note: March 2009
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Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:hit:hitcei:2009-05

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