 Ownership structure and the separation of voting and cash flow rights-evidence from SwitzerlandApplied Financial Economics, 2009, vol. 19, issue 18, 1453-1476 Abstract: This article analyses the relation between a firm's equity capital structure, managerial and outside block ownership, and firm value based on a unique and hand-collected sample of 545 observations on 174 Swiss firms over the period from 2002 to 2005. While previous papers concentrate either on managerial ownership or on blockholdings, which can, but need not be, managerial, this article distinguishes between the two and investigates their relative importance. This distinction turns out to be important. I find the probability that a firm has a dual-class structure to be positively related to managerial ownership, the ownership of the single largest shareholder, and inside blockholders more generally while negatively related to the ownership of 'true' outside blockholders such as listed companies, mutual and pension funds. Moreover, I present strong evidence that the aim of the dual-class structure is to secure the largest shareholder's and, more specifically, inside blockholders' control over the firm. Most importantly, I find evidence that these inside controlling shareholders take advantage of the dual-class structure by extracting private benefits of control. Date: 2009 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:apfiec:v:19:y:2009:i:18:p:1453-1476 Ordering information: This journal article can be ordered from DOI: 10.1080/09603100902984350 Access Statistics for this article Applied Financial Economics is currently edited by Anita Phillips More articles in Applied Financial Economics from Taylor & Francis Journals |
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