Industrial Foundations as Long-Term Owners

Research output: Working paperResearch

Abstract

Short-termism has become a serious concern for corporate governance, and this has inspired a search for institutional arrangements to promote long-term decision-making. In this paper, we call attention to long-term ownership by industrial foundations, which is common in Northern Europe but little known in the rest of the world. We use a unique Danish data set to document that industrial foundations are long-term owners that practice long-term governance. We show that foundation ownership is highly stable compared to other ownership structures. Foundation-owned companies replace managers less frequently. They have conservative capital structures with low financial leverage. They score higher on an index of long-termism in finance, investment, and employment. They survive longer. Overall, our paper supports the hypothesis that corporate time horizons are influenced by ownership structures and particularly that industrial foundations possess characteristics that promote long-termism. Policymakers, business owners and managers interested in promoting long-term governance models should therefore reconsider the role of ownership structure.
Original languageEnglish
Place of PublicationBrussel
PublisherEuropean Corporate Governance Institute (ECGI)
Number of pages60
DOIs
Publication statusPublished - 2018
SeriesECGI Working Paper in Finance
Number556/2018

Keywords

  • Corporate governance
  • Industrial foundations
  • Long-termism

Cite this

Thomsen, S., Poulsen, T., Børsting, C. W., & Kuhn, J. M. (2018). Industrial Foundations as Long-Term Owners. Brussel: European Corporate Governance Institute (ECGI). ECGI Working Paper in Finance, No. 556/2018 https://doi.org/10.2139/ssrn.2725462