The Ultimate Ownership of Western European Corporations

Faccio, Mara; Lang, Larry H.P.

doi:10.2139/ssrn.286053

Cited by 1,153 publications

(1,828 citation statements)

References 27 publications

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“…In order to test the alignment effect in Hypothesis 3, we interact the Minimum Stake Group 4 A blockholder is any shareholder with an ownership stake of 1% or more. The results also hold for a 10 or 20% threshold (Faccio and Lang, 2002). 5 Such cut offs arise naturally from the analysis conducted below (Table 4), which reveals that the stake of the controlling group that minimizes a firm's ROA is within the 50 60% interval.…”

Section: Sample and Variablesmentioning

confidence: 77%

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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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Section: Sample and Variablesmentioning

confidence: 77%

“…Although such ownership structures can be observed among listed firms, they are especially prevalent in nonlisted firms. In fact, Faccio and Lang (2002) document the presence of at least two large shareholders in almost half of the firms in a sample of European firms.…”

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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“…AMADEUS does not report information about dual-class stock, but the scenario sketched above seems an unlikely one. For example, Faccio and Lang (2002) trace the ownership patterns of a large set of European corporations, and find that divergence between cash-flow rights and voting rights is of importance in only a few of their sample countries. Moreover, such devices may be thought to be particularly unlikely among multinational entities.…”

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confidence: 99%

Earnings shocks and tax-motivated income-shifting: Evidence from European multinationals

Dharmapala

Riedel

2013

Journal of Public Economics

208

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This paper presents a new approach to estimating the existence and magnitude of taxmotivated income shifting within multinational corporations. Existing studies of income shifting use changes in corporate tax rates as a source of identification. In contrast, this paper exploits exogenous earnings shocks at the parent firm and investigates how these shocks propagate across low-tax and high-tax multinational subsidiaries. This approach is implemented using a large panel of European multinational affiliates over the period [1995][1996][1997][1998][1999][2000][2001][2002][2003][2004][2005]. The central result is that parents' positive earnings shocks are associated with a significantly positive increase in pretax profits at low-tax affiliates, relative to the effect on the pretax profits of high-tax affiliates. The result is robust to controlling for various other differences between low-tax and high-tax affiliates and for country-pair-year fixed effects. Additional tests suggest that the estimated effect is attributable primarily to the strategic use of debt across affiliates. The magnitude of income shifting estimated using this approach is substantial, but somewhat smaller than that found in the previous literature. Acknowledgments:We thank participants at the

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“…Based on shareholders' voting rights, we distinguish among several ownership structures presented in Table 1. An ultimate owner is defined as a shareholder owning more than 20% direct or indirect voting rights (La Porta et al (1999); Faccio and Lang (2002)). 10 If a firm has such an ultimate owner, we classify it as ultimately owned firm.…”

Section: Ownership Patternsmentioning

confidence: 99%

Complex Ownership and Capital Structure

Xu¹,

Paligorova²

2009

SSRN Journal

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This paper investigates the impact of pyramid ownership structure and multiple controlling shareholders on firm leverage. Pyramids, having at least one controlling shareholder and a subsidiary, rely significantly more on debt financing than non-pyramid firms. Moreover, higher leverage is observed in pyramids where the second controlling shareholders have more voting rights. We also find that the disparity between the voting rights of the first two controlling shareholders is negatively related to firm leverage. Interestingly, the influence of the second controlling shareholder is only present in non-family controlled pyramids. Overall, the results are consistent with the view that controlling shareholders in pyramids use debt to secure their private benefits. JEL classification: G31, G32 Bank classification: Financial markets; International topics RésuméLes auteures étudient l'incidence de la structure de propriété pyramidale et de la présence de plusieurs actionnaires dominants sur le levier financier des sociétés. Les pyramides, qui comptent au moins un actionnaire dominant et une filiale, se financent beaucoup plus par emprunt que les autres types de société. Le recours au levier financier est encore plus marqué lorsque les deuxièmes actionnaires en importance ont davantage de droits de vote que les premiers. Les auteures constatent aussi que l'écart entre les droits de vote des deux principaux actionnaires est inversement lié au levier financier des sociétés. Fait intéressant, les deuxièmes actionnaires n'ont d'influence que dans les pyramides qui ne sont pas contrôlées par une famille. Dans l'ensemble, les résultats sont conformes au point de vue selon lequel les actionnaires dominants au sein des pyramides utilisent l'emprunt pour servir leurs intérêts privés.

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The Ultimate Ownership of Western European Corporations

Cited by 1,153 publications

References 27 publications

Ownership structure and minority expropriation: the case for multiple blockholders

Ownership structure and minority expropriation: the case for multiple blockholders

Earnings shocks and tax-motivated income-shifting: Evidence from European multinationals

Complex Ownership and Capital Structure

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