Private Benefits of Control: A Cross-country Comparison With a New Approach

Darnell Flemming Larsen

Studenteropgave: Kandidatafhandlinger


This paper proposes a new method for estimating the private benefits of control in M&A transactions, building upon previous research by Barclay and Holderness (1989). Our ap-proach addresses a potential bias in Barclay and Holderness’s original method and offers a complementary method to previous research developed by Dyck and Zingales (2004), focus-ing on the cross-country effect on the private benefits of control. We apply this new method to estimate private benefits of control for publicly traded acquirers in 35 countries, using a sample of 7,343 controlling blocks spanning from 2000 to 2022. Our findings suggest an av-erage control premium of 12.19% of the acquirer’s market value. We observe that acquirers tend to value private benefits of control less when the target company is subject to stronger governance. Additionally, we find that private benefits of control increase in countries with more favorable market, economic, and legal conditions. We compare our results with those obtained using Barclay and Holderness method and discuss the theoretical implications of the differences between the two approaches. Our analysis suggests that the method pro-posed in this paper is better aligned with economic and financial theory.

UddannelserCand.merc.oecon Advanced Economics and Finance, (Kandidatuddannelse) Afsluttende afhandling
Antal sider99
VejledereKasper Meisner Nielsen