Ownership structure and performance in large Spanish companies. Empirical evidence in the context of an endogenous relation

Abstract

The aim of this paper is to study the relationship between ownership structure and firm value. This relationship is analyzed taking into account not only the endogenous character of ownership but also the peculiarities of the Spanish corporate system. For this purpose, we select a balanced panel of 101 companies quoted in the Madrid exchange market from 1991 through 1997. We have applied econometric panel data techniques (generalized method of moments, gmm), which allows us to control the endogeneity problem through instruments. Our results confirm the positive effect of ownership concentration on firm market value. This relationship is robust to the inclusion of variables regarding the nature of the main shareholder, firm industry and time. Furthermore, we present some evidence about the relationship between the type of control (majority and minority) and a firm’s market value

Post-privatisation ownership concentration: Determinants and influence on firm efficiency

“…In this sense, our results suggest the importance of the post-privatisation firm ownership structures for the success of the privatisation processes. Our findings are in accord with those of previous studies that report a positive relationship between firm ownership concentration and value for listed Spanish companies (Alonso-Bonis and De Andrés-Alonso, 2007;De Miguel et al, 2004;Mínguez-Vera and Martín-Ugedo, 2007); for former socialist countries (Claessens and Djankov, 1999); and for international samples of privatised firms in developed and developing economies (Boubakri et al, 2005a). Therefore, in the case of a Western European economy, our results reinforce previous findings that private ownership concentration enhances efficiency in privatised companies.…”

Do Promoter Holding and Firm Performance Exhibit Endogenous Relationship? An Analysis from Emerging Market of India

“…A study of literature reveals that there is no consensus on relationship between ownership and firm performance. A perusal of Table 1 indicates that Jensen (1986), Claessens and Djankov (1999), Thomsen and Pedersen (2000), Chen (2001), Mitton (2002), Alonso-Bonis and de Andrés-Alonso (2007) among others document a positive relationship between ownership and firm performance, implying that concentrated ownership has a positive bearing on firm performance. On the contrary, a strand of literature led by Shleifer and Vishny (1997) finds a negative relationship between ownership and firm performance.…”

“…1.See, for example, Demsetz and Lehn (1985), Jensen (1986), Shleifer and Vishny (1997), Thomsen and Pedersen (2000), Chen (2001), Mitton (2002), Cheung and Wei (2006), Alonso-Bonis and de Andrés-Alonso (2007), etc.…”

Effects of Family Ownership, Debt and Board Composition on Mexican Firms Performance

“…This hypothesis arises from the Jensen's free cash flow argument where cash flow distribution is one of the main causes of agency problems. This flow may imply that resources surpass the amount required to fund all profitable investments as financial liabilities force management to direct these resources away from non-profitable investments opportunities [50]. Given that indebtedness implies recurrent disbursements over time, thus diminishing the unlimited funds for management, as some funding must be designated to repay debt, thus, restricting the discretionary behavior of management [49,51].…”