Ownership structure, control and firm performance: the effects of vote-differentiated shares

Bjuggren, Per-Olof, Johan Eklund and Daniel Wiberg

Applied Financial Economics, 2007, vol. 17, issue 16, pages 1323-1334

Abstract: This article contributes to the literature on ownership, control and performance by exploring these relationships for Swedish listed companies (1997-2002). We find that firms, on average, are making inferior investment decisions and that the use of dual-class shares have a negative effect on performance. Marginal q is used as a measure of economic performance. It was presented in an article by Mueller and Reardon in 1993 and has recently been used in empirical studies of ownership and performance by, among others, Gugler and Yurtoglu (2003). Frequently Tobin's q is used in studies of this type, but Tobin's q has a number of disadvantages which can be circumvented by employing a marginal q. This study adds to earlier studies by investigating how the separation of vote and capital shares' creates a wedge between the incentives and the ability to pursue value-maximization. The relationships between the performance and different ownership characteristics like ownership concentration and foreign ownership are also investigated.

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Working Paper: Ownership Structure, Control and Firm Performance: The Effects of Vote Differentiated Shares (2005)
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