Equity Ownership and Firm Value in Emerging Markets
Year: 2003
Type: article
Abstract: This paper investigates whether management ownership structures and large non-management blockholders are related to firm value across a broad sample of firms from emerging markets. I find that firm values are lower when control and cash flow rights of a firm's management group are separated, which indicates that the private benefits of control are reflected in the price paid by non-controlling shareholders. My results also suggest that large non-management blockholders can reduce these private benefits. The separation of management group ownership and control has a significantly more negative relation to value in countries with low shareholder protection, whereas large non-management blockholders have a significantly more positive relation. These results imply that private control benefits are discounted even more by minority shareholders where external shareholder protections are weak and that large non-management blockholders can act as a partial substitute for these missing institutional governance mechanisms.
DOI: 10.2307/4126768
Author: Karl V. Lins
Institution: University of Utah
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W3125701181