Disentangling the Impact of Control-Enhancing Mechanisms on Firm Performance: An Empirical Investigation across Five European Countries

Alessandro Zattoni, Torben Pedersen

    Publikation: Bidrag til bog/antologi/rapportKonferenceabstrakt i proceedingsForskningpeer review

    Abstrakt

    Governance scholars and investors traditionally advocate against the use of control enhancing mechanisms, i.e. mechanisms aimed at separating voting and cash flow rights. These mechanisms may, in fact, determine a
    deviation from the proportionality principle and may encourage large and controlling shareholders to expropriate minority shareholders. The aim of this article is to contribute to the current debate investigating the implications
    of these control-enhancing mechanisms on firm performance. To reach this purpose, we collected ownership data on the (100) largest listed companies per capitalization in five European countries (i.e. France, Germany, Italy, Spain, and the UK). Then we tested the consequences of control-enhancing mechanisms for firm performance using 2SLS regression models. Our results show that (i) mechanisms that lock-in control do have a direct and negative impact on firm performance, and (ii) the negative impact on firm performance of mechanisms aimed at enhancing control by leveraging voting power is mediated by the divergence in voting and cash flow rights.
    OriginalsprogEngelsk
    TitelProceedings of the 53rd Annual Meeting of the Academy of International Business
    RedaktørerShige Makingo , Tunga Kiyak
    UdgivelsesstedEast Lansing, MI
    ForlagAcademy of International Business
    Publikationsdato2011
    Sider92
    StatusUdgivet - 2011
    BegivenhedAIB 2011 Annual Meeting: International Business for Sustainable World Development - Nagoya, Japan
    Varighed: 24 jun. 201128 jun. 2011
    Konferencens nummer: 53
    http://aib.msu.edu/events/2011/

    Konference

    KonferenceAIB 2011 Annual Meeting
    Nummer53
    LandJapan
    ByNagoya
    Periode24/06/201128/06/2011
    Internetadresse
    NavnAcademy of International Business. Annual Meeting. Proceedings
    Vol/bind53
    ISSN2078-4430

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