Ownership structure, sharing of control and legal framework. International evidence

Àscar L¢pez de Foronda P‚rez (), F‚lix L¢pez-Iturriaga and Marcos Santamar¡a Mariscal ()
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Àscar L¢pez de Foronda P‚rez: Departamento de Econom¡a y Administraci¢n de Empresas, Facultad de Ciencias Econ¢micas y Empresariales, Universidad de Burgos
Marcos Santamar¡a Mariscal: Departamento de Econom¡a y Administraci¢n de Empresas, Facultad de Ciencias Econ¢micas y Empresariales, Universidad de Burgos
Authors registered in the RePEc Author Service: Félix López-Iturriaga () and Lopez-de-Foronda, Óscar ()

No 2007-01, Working Papers "New Trends on Business Administration". Documentos de Trabajo "Nuevas Tendencias en Dirección de Empresas". from Interuniversity Research Master and Doctorate Program (with a quality mention of ANECA) on "Business Economics", Universities of Valladolid, Burgos, Salamanca and León (Spain). Until 2008, Interuniversity Doctorate Program (with a quality mention of ANECA) “New trends in Business Administration”, Universities of Valladolid, Burgos, and Salamanca (Spain). Master en Investigación y Programa de Doctorado Interuniversitarios (con mención de calidad de la ANECA) en "Economía de la Empresa", Universidades de Valladolid, Burgos, Salamanca y León (España). Hasta 2008, Programa de Doctorado Interuniversitario (con mención de calidad de la ANECA) “Nuevas Tendencias en Dirección de Empresas”, Universidades de Valladolid, Burgos y Salamanca (España).

Abstract: We analyze the relation between capital structure, ownership structure, and corporate value for a sample of 1,216 firms from 15 European countries. Our results stress two different conflicts of interest and show the differential role played by the mechanisms of corporate control depending on the legal and institutional environment. In common law countries, as a consequence of the relationships between managers and shareholders, capital structure and managerial ownership are the most effective mechanisms of control. In civil law countries, however, as a consequence of the conflicts between majority and minority shareholders, the ownership concentration and the sharing of control within the firm become crucial. In this scenario, the second reference shareholder plays a critical role in contesting the control of the dominant largest shareholder in order to reduce the extraction of private benefits and improve the firm?s performance

Keywords: Law and finance approach; capital structure; ownership structure; corporate governance. (search for similar items in EconPapers)
Pages: 26 pages
Date: 2007-06
New Economics Papers: this item is included in nep-bec, nep-eec, nep-law and nep-reg
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Journal Article: Ownership Structure, Sharing of Control and Legal Framework: international evidence (2007)
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More papers in Working Papers "New Trends on Business Administration". Documentos de Trabajo "Nuevas Tendencias en Dirección de Empresas". from Interuniversity Research Master and Doctorate Program (with a quality mention of ANECA) on "Business Economics", Universities of Valladolid, Burgos, Salamanca and León (Spain). Until 2008, Interuniversity Doctorate Program (with a quality mention of ANECA) “New trends in Business Administration”, Universities of Valladolid, Burgos, and Salamanca (Spain). Master en Investigación y Programa de Doctorado Interuniversitarios (con mención de calidad de la ANECA) en "Economía de la Empresa", Universidades de Valladolid, Burgos, Salamanca y León (España). Hasta 2008, Programa de Doctorado Interuniversitario (con mención de calidad de la ANECA) “Nuevas Tendencias en Dirección de Empresas”, Universidades de Valladolid, Burgos y Salamanca (España). Contact information at EDIRC.
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