Why do holding companies in pyramidal groups trade at a discount?

An Rommens, Marc Deloof and Marc Jegers

Working Papers from University of Antwerp, Faculty of Business and Economics

Abstract: Holding companies, which play an important role in corporate finance in Belgium and in other Continental European countries, often trade at a discount to their estimated net asset value (NAV). First, we discuss possible explanations for this discount: holding company destroys value, NAV overestimates actual value, noise traders cause underpricing, and private benefits of control. Second, we investigate the discount of the Belgian holding company Cobepa, for which detailed information on the calculation of the NAV was available. We can exclude the first three explanations for the Cobepa case, we cannot rule out private benefits as an explanation.

Keywords: Holding companies; Closed-end fund discount; Pyramidal groups; Private benefits; Clinical study (search for similar items in EconPapers)
Pages: 48 pages
Date: 2004-04
References: Add references at CitEc
Citations:

Downloads: (external link)
https://repository.uantwerpen.be/docman/irua/8bfe33/5818b8e1.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ant:wpaper:2004007

Access Statistics for this paper

More papers in Working Papers from University of Antwerp, Faculty of Business and Economics Contact information at EDIRC.
Bibliographic data for series maintained by Joeri Nys ().