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Creating Value by Changing the Old Guard: The Impact of Controlling Shareholder Heterogeneity on Firm Performance and Corporate Policies
Published online by Cambridge University Press: 31 January 2014
Abstract
Theory suggests that controlling shareholders can influence firm value through both shared benefits creation and private benefits consumption. Using negotiated control-block transfers from 31 countries, we look beyond ownership concentration and investigate how controlling shareholder heterogeneity influences the relative importance of these two effects. We document that a control transfer precipitates positive firm outcomes particularly when the vendor has maintained control over an extended period and the acquirer displays a strong incentive to engage in restructuring. In such cases, we observe a sustained positive price reaction, more focused corporate investments, lower leverage, higher operating efficiency, and superior long-term performance.
- Type
- Research Articles
- Information
- Journal of Financial and Quantitative Analysis , Volume 48 , Issue 6 , December 2013 , pp. 1781 - 1811
- Copyright
- Copyright © Michael G. Foster School of Business, University of Washington 2013
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