Large Shareholders, Monitoring, and the Value of the Firm

Burkart, Mike; Gromb, Denis; Panunzi, Fausto

doi:10.1162/003355397555325

Cited by 1,268 publications

(697 citation statements)

References 31 publications

(35 reference statements)

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“…We assume that the strategic decision to acquire equity in a rival belongs to the dominant controlling shareholder of one company in the industry who may already hold outside toeholds. We find that, maximizing his own wealth, this shareholder may engage Panunzi (1997) or Bolton and Von Thadden (1998) for a theoretical approach, and La Porta, Lopez-Silanes, Shleifer and Vishny (2002) for a discussion of the role of the large shareholder. 7 The fact that, within groups of firms, some categories of shareholders may be favored at the expense of others has long been acknowledged by the finance literature.…”

Section: Introductionmentioning

confidence: 83%

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Incentives for Partial Acquisitions and Real Market Concentration

Charléty¹,

Fagart²,

Souam³

2009

JITE

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We analyze the incentives of a controlling shareholder of a firm to acquire, directly or indirectly through his firm, shares in a competitor. We charaterize the conditions under which these partial acquisitions are profitable for this dominant shareholder as well as the equilibrium toehold and its nature: controlling or silent. We find that while this shareholder gains, the acquisition is detrimental to minority shareholders of his firm, or of the target, or even of both. We show that the incentives are enhanced if the dominant shareholder initially holds silent stakes in rivals while controlling interests may discourage them. Moreover, we find that partial acquisitions always lead to a decrease in the joint profit of the two firms involved, and an increase in competitors's profits as the market becomes less competitive.

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Section: Introductionmentioning

confidence: 83%

“…The "favorite" effect 17 For instance, when A holds shares in only three firms, say 1, 2 and 3, and A controls firm 1 only, C = {1},…”

Section: The Different Effects At Playmentioning

confidence: 99%

Incentives for Partial Acquisitions and Real Market Concentration

Charléty¹,

Fagart²,

Souam³

2009

JITE

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“…E mail: joatribo@emp.uc3m.es 1 Examples of seminal papers are Berle and Means (1932), Jensen and Meckling (1976), Grossman and Hart (1980), Schleifer and Vishny (1986) and Burkart et al (1997). 2 Barclay and Holderness (1989), Barclay et al (1993) and Zingales (1994) measure private benefits indirectly by showing that large blocks of ownership that confer voting rights sell at a premium.…”

Section: Introductionmentioning

confidence: 99%

Ownership structure and minority expropriation: the case for multiple blockholders

Gutiérrez

Tribó

Mariano

2012

Applied Financial Economics

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This article investigates minority expropriation in closely-held firms. Using a sample of Spanish firms for the period from 1996 to 2006, we find that firms that are more vulnerable to minority expropriation have blockholders controlling groups with aggregate equity stakes that are far removed from 50%, which is the point that maximizes the chances of expropriation. Moreover, performance improves when the controlling group's stake moves away from the region where expropriation is more likely -the alignment effect -and, if within this region, when the number of group members increases -the bargaining effect.

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“…Various theoretical studies (e.g., Shleifer and Vishny (1997), have indicated that for block holders, the incentive to monitor managers increases with increase of stakes in terms of ownership. This reduces the problem of free-rider associated with dispersed shareholding (Hart, 1995a;Burkart et al, 1997). Further, as compared to dispersed share holders, large shareholders are in a better position to take concerted action against managers.…”

Section: Ownership Structurementioning

confidence: 98%

Study on theories and mechanisms of corporate governance

Mishra

Kapil

2017

IJAAPE

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This paper aims to review the theories of corporate governance for understanding the theoretical basis of corporate governance mechanisms. Major theoretical studies on corporate governance, including studies done in emerging economies, are included in the review. The paper looks at corporate governance theories from value creation point of view. It is observed that the two perspectives of corporate governance, i.e., shareholder and stakeholder perspectives, are not in contrast to each other but are pointing towards the same goal, i.e., value creation. However, one points towards value creation for shareholders and the other points towards creation of societal value. While reviewing theoretical underpinnings and assumptions for corporate governance perspectives, due consideration has been given to the development of corporate governance mechanism based on various existing theories. A theoretical framework for understanding the relationship between corporate governance mechanism and corporate performance has been proposed. Emerging challenges for corporate governance theories have also been indicated. This being a review paper, one of the major limitations is an unintentional omission of some literature because of non-availability or non-reachability. Literature that would have been present in languages other than English could also not been included in the review.

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Large Shareholders, Monitoring, and the Value of the Firm

Cited by 1,268 publications

References 31 publications

Incentives for Partial Acquisitions and Real Market Concentration

Incentives for Partial Acquisitions and Real Market Concentration

Ownership structure and minority expropriation: the case for multiple blockholders

Study on theories and mechanisms of corporate governance

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