Blockholders presence, identity and institutional context. Are they relevant for firm value?

Mário Sacramento Santos, António Carrizo Moreira and Elisabete Simões Vieira

International Journal of Business Governance and Ethics, 2013, vol. 8, issue 1, 18-49

Abstract: This study analyses the relationship between ownership concentration and firm value. Our findings, based on a dynamic panel data analysis, show that there is a quadratic relationship between the company's value and its ownership concentration. Additionally, our evidence suggests that for countries where investor protection is low, the relationship follows an inverted U shape, while for countries where investor protection is high, the relationship is positive and nearly linear. Moreover, the influence of blockholders depends on their identity. This paper highlights the superior performance of family firms in controlling agency problems, a situation which contrasts vis-à-vis institutional shareholders. Finally, we report that the family effect is nonlinear. Indeed the positive effect starts to taper off at around 30% of ownership being somewhat smaller and less statistically significant between 30% and 50% of ownership. Moreover, in contrast to recent studies, the family effect is more pronounced in majority-controlled firms.

Keywords: blockholders; expropriation; firm value; family firms; institutional investors; ownership concentration; investor protection; blockholder identity; agency problems; family effect; nonlinear effects; families; institutional shareholders; majority-controlled firms; Western Europe; Belgium; Denmark; Finland; France; Germany; Greece; Italy; Netherlands; Portugal; Spain; Sweden; Switzerland; United Kingdom; UK; Holland; business governance. (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (2)

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