Corporate Control around the World Flashcards
The main idea gehind the paper
There are number of influencing factors that determine corporate control concentration. The paper made significant empirical progress. Influencing factors are legal, economic development, shareholder protection and labor legislation.
What is corporate control?
Ownership concentration/power of shareholders.
What is corporate control determinants?
Investor protection rights, legal origin, state of the economy.
What is the problem with previous literature?
Reliance on strict definition - widely held corporations and firms with a dominant shareholder; heterogeneity of firm size - small firms differ from mid-sized firms that differ from larger firms.
What are Findings for “legal families”?
The most ownership concentration in French civil law countries.
German civil-law take second place and then Scandinavian civil law countries. All 3 show similar patterns in ownership concentration.
Common-law countries have the lowest ownership concentration.
What are Findings for “Equity blocks”?
Equity blocks are present in >80% of non-controlled firms, consistent across regions. Share of firms with widely held firms with blocks is highest in French civil-law countries and lowest in common-law countries.
What are shareholder protection rights?
Possibility to take legal action against managers who abuse their position
What are Findings “Legal protection”?
Shareholder protection rights are systematically linked with dispersed ownership.
What are Findings for “GDP”?
Dispersed ownership weakly correlates with GDP/capita. Correlation is negative between income and corporate control is pronounced only for large corporations (top 10%). Correlation = 0 for small and medium listed companies.
What are Findings for “creditor rights”?
Creditor rights have small and statistically insignificant correltaion with corporate control.
What are Findings for “Legal formalism”?
Legal formalism (time needed for court disputes) weakly related to corporate control.`
What are findings for “Entry barriers”?
Entry barriers have low correlation with corporate control and ownership concentration.
What are findings for “Labor regulation”?
Labor regulation and corporate control are strongly correlated. Labor legislation imposing restrictions on overtime, firings and union membership power are relatively high in countries with high percentage of corporate control. (Political theories of corporate control say that labor laws has an effect on interaction between the controlling shareholders, workers and outside investors).
What are remarks on Anatomy of corporate control?
Families control firms in all countries.
State ownership is an important factor especially in some countries (Russia, China, Brazil, India).
What are remarks on Corporate control and legal origin?
Ownership is more concentrated in French civil-law countries than in German civil-law countries. Same insight about equity blocks in widely-held companies, only that they are common across all countries.
Country development and corporate control correlate negatively only when examining large corporations.
