Equity Block Transfers in Transition Economies: Evidence from Poland

Grzegorz Trojanowski

No 3280, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: This Paper investigates valuation effects of share block transfers and employs agency theory to explain the determinants of block premia. A sample of transactions from Poland is used to measure benefits and costs of ownership concentration. Block premia are found to be substantially lower than in well-developed markets, in spite of the insufficient minority shareholders? protection in transitional economies. Shareholder?s opportunities to extract private benefits of control turn out to depend not only on the size of equity stake, but also on the relative power of other block holders. The expropriation threat appears to be most severe in the companies where the free float constitutes a substantial fraction of the shares outstanding. Moreover, the analysis reveals that liquidity costs considerably influence the level of block premia in Poland. Finally, the results document a positive role of the state as an institutional investor in listed companies.

Keywords: Agency problems; Corporate governance; Ownership structure; Block trades (search for similar items in EconPapers)
JEL-codes: G30 G32 G34 (search for similar items in EconPapers)
Date: 2002-03
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Citations: View citations in EconPapers (1)

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