Ownership Concentration and Share Valuation: Evidence from Germany

Jeremy Edwards and Alfons Weichenrieder

No 99-22, EPRU Working Paper Series from Economic Policy Research Unit (EPRU), University of Copenhagen. Department of Economics

Abstract: Concentrated ownership of large listed companies is widespread throughout the world, and Germany is typical in this respect. This paper proposes a method of distinguishing empirically between the beneficial and harmful effects of ownership concentration, and applies it to German data. The results show that, for most types of largest shareholder, the beneficial effects on minority shareholders of increased ownership (greater monitoring of management, and reduced incentives to exploit minority shareholders due to greater cash-flow rights) outweigh the harmful effect (greater private benefits of control due to greater control rights).

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Working Paper: Ownership Concentration and Share Valuation: Evidence from Germany (1999)
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