The Principle of Proportional Ownership, Investor Protection and Firm Value in Western Europe - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook The Principle of Proportional Ownership, Investor Protection and Firm Value in Western Europe write by Morten Bennedsen. This book was released on 2006. The Principle of Proportional Ownership, Investor Protection and Firm Value in Western Europe available in PDF, EPUB and Kindle. Previous research initiated by Claessens et al. (2002) has established a value discount of disproportional ownership structures. Due to omitted variables problems it is difficult to provide a causal interpretation of these findings. We provide a thorough analysis of this value discount in a large sample of Western European firms, which strengthens the causal interpretation that the discount is driven by incentive and entrenchment effects. First, we show that the value discount is higher in firms with low cash flow concentration, in family firms, in industries with higher amenity value and in countries with better investor protection. Second, we show that these findings are consistent with the predictions of a theoretical model of incentive and entrenchment effects. Third, we find little empirical evidence for a number of alternative omitted variable explanations, including: protection of private benefits; voting and block premia; low-liquidity discount; and, protection against uninvited takeovers. Fourth, we present the puzzling finding that the value discount is significantly higher in firms with dual class shares than in firms with pyramidal ownership. Fifth, we find no impact of disproportional ownership structures on operating performance. Finally, we discuss policy implications of these findings in relationship to the ongoing process of harmonization of the European capital markets.
The Principle of Proportionality
The Principle of Proportionality - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook The Principle of Proportionality write by Morten Bennedsen. This book was released on 2005. The Principle of Proportionality available in PDF, EPUB and Kindle. Recent policy initiatives within the harmonization of European company laws have promoted a so-called "principle of proportionality" through proposals that regulate mechanisms opposing a proportional distribution of ownership and control. We scrutinize the foundation for these initiatives by analyzing the use of instruments to separate ownership from control across legal regimes in a sample of over 4,000 publicly traded firms from 14 Western European countries. First, we confirm the negative impact on firm value from disproportional ownership structures previously established in a sample of Asian firms by Claessens et al. (2002). Second, we show that dual class shares have a larger and more significant negative effect on firm value than pyramids and cross holdings. Third, we find that the impact of disproportionality and the underlying instruments is inversely related to the level of investor protection. Thus, dual class shares and pyramids substitute legal protection in countries with inadequate investor protection. Fourth, we find no evidence of a significant effect of disproportionality instruments on earnings performance. Finally, we discuss policy implications of these findings in relationship to the process of harmonization of the European capital markets. JEL classifications: G30, G32, G34 and G38 Keywords: Ownership Structure, Dual Class Shares, Pyramids, EU company laws.
The European Company Law Action Plan Revisited
The European Company Law Action Plan Revisited - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook The European Company Law Action Plan Revisited write by Koen Geens. This book was released on 2010. The European Company Law Action Plan Revisited available in PDF, EPUB and Kindle. The harmonization of company law has always been on the agenda of the European Union. Besidesthe protection of third parties affected by business transactions, the founders had two other objectives: first, promoting freedom of establishment, and second, preventing the abuse of such freedom. The European Commission issued its Company Law Action Plan in 2003. In this volume researchers of the Jan Ronse Institute for Company Law of the Katholieke Universiteit Leuven present five chapters on the main priorities of the Action Plan: capital and creditor protection,corporate governance, one share one vote, financial reporting, and corporate mobility. The book also includes responses and ensuing discussions by reputed European company law experts.
Advances in Financial Economics
Advances in Financial Economics - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Advances in Financial Economics write by Kose John. This book was released on 2012-11-12. Advances in Financial Economics available in PDF, EPUB and Kindle. This volume contains eight empirical papers that examine corporate governance from a number of different perspectives.
Corporate Value, Ultimate Control and Law Protection for Investors in Western Europe
Corporate Value, Ultimate Control and Law Protection for Investors in Western Europe - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Corporate Value, Ultimate Control and Law Protection for Investors in Western Europe write by Jannine Poletti Hughes. This book was released on 2009. Corporate Value, Ultimate Control and Law Protection for Investors in Western Europe available in PDF, EPUB and Kindle. This paper analyses both ultimate ownership and investors' protection in determining corporate value for a sample of firms from 12 Western European countries. The analysis is based on two data sets which consider the presence of an ultimate controller, as well as, the level of separation of cash flow rights and voting rights in the controlling stake. It examines the effect of the rights given to both creditors and shareholders, and the degree to which these rights are enforced with a measure of the efficiency of the judicial system. The main findings suggest that it is likely that firms tend to adjust their ultimate controlling structure to overcome the value-decreasing risks associated with country laws that offer low investors' protection. This information is a valuable tool for managers in order to strategically adapt institutional corporate governance practices.
