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Large shareholders, control contestability and firm productive efficiency

Sabri Boubaker (), Riadh Manita () and Wael Rouatbi ()
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Riadh Manita: Neoma Business School
Wael Rouatbi: Montpellier Research in Management

Annals of Operations Research, 2021, vol. 296, issue 1, No 23, 614 pages

Abstract: Abstract This paper investigates the effect of the largest controlling shareholders on firm productive efficiency. Using a sample of French listed firms, we employ parametric (linear regression), semi-parametric (Olley and Pakes) and non-parametric (Data Envelopment Analysis) approaches to estimate productive efficiency. We find a negative association between the excess control rights of dominant owners and firm productive efficiency, indicating that their private benefits of control prevent them from favoring productive projects. Our findings withstood several sensitivity and endogeneity tests. Additional analysis shows that multiple large shareholders, beyond the controlling owner, play a governance role that neutralizes the effect of excess control on productive efficiency.

Keywords: Data Envelopment Analysis; Productivity; Olley and Pakes; Large shareholders; Multiple large shareholders (search for similar items in EconPapers)
JEL-codes: D24 G30 G32 G34 (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1007/s10479-019-03402-z

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