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Ownership Dynamics with Large Shareholders: An Empirical Analysis

Published online by Cambridge University Press:  01 May 2013

Marcelo Donelli ,
Borja Larrain  and
I. Francisco Urzúa
Marcelo Donelli
Affiliation:
[email protected], Pontificia Universidad Católica de Chile, Escuela de Administración, Avenida Vicuña Mackenna 4860, Macul, Santiago, Chile
Borja Larrain
Affiliation:
[email protected], Pontificia Universidad Católica de Chile, Escuela de Administración and Finance UC, Avenida Vicuña Mackenna 4860, Macul, Santiago, Chile
I. Francisco Urzúa
Affiliation:
[email protected], Tilburg University, Department of Finance, PO Box 90153, Tilburg, 5000 LE, Netherlands.
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Abstract

We study the empirical determinants of corporate ownership dynamics using a unique, hand-collected 20-year data set on the ownership structure of Chilean companies. Controllers’ blockholdings are on average high and stable over time. Controllers still make changes to their holdings through issuance and block trades. In a typical year controllers’ blockholdings decrease (increase) by 5 percentage points or more in approximately 6% (7%) of firms. We find that the separation between controllers’ voting and cash-flow rights reduces the likelihood of ownership dilution. Dilution is preceded by high stock returns and predicts low stock returns in the future when done through issuance.

Type
Research Articles
Information
Journal of Financial and Quantitative Analysis , Volume 48 , Issue 2 , April 2013 , pp. 579 - 609
Copyright
Copyright © Michael G. Foster School of Business, University of Washington 2013 

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