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Table: Empirical studies on ownership structure and performance[1]

Introduction: Want to find the empirical study by Demsetz and Lehn [1985]? Just click D below and move down alphabetically on the resulting web page. Note that this page is updated when new papers emerge. Also, a few studies have blank cells. This is temporary. They will eventually be completed.






Sample & Period[2]


variables(s)[3] [4]

Performance variable(s)

Other variable(s): Controls & dependents[5]

Statistical methods

Main results

Preferred explanation

Agrawal and Knoeber [1996], Journal of Financial and Quantitative Economics

383 large US firms (from Forbes 800).


1) % insider ownership by directors and officers. 2) Dummy for presence of founding CEO. 3) % of shares held by above 5% blockholders.

Data from Disclosure.

Tobin's Q by market value of stock, preferred stock and debt to book value of assets.

1) Size by assets. 2) Standard deviation of stock return. 3) Dummy for regulated firms. 4) Years of CEO tenure. 5) Number of officers and directors. 6) R&D to assets. 7) Number of institutional shareholders. 8) Dummy for NYSE listing. 9) Firm diversification. 10) # of outside CEO job opportunities. 11) Cash flow return. 12) Control activity by % of acquired firms in each two-digit SIC. 13) Advertising/assets

Dependent variables:

1) Insider ownership. 2) Blockholder ownership. 3) Institutional ownership. 4) Fraction of non-officers in the board. 5) Years of CEO employment. 6) Leverage by dept to firm value.

OLS and 2SLS regression. Test for a roof-shaped relation by including the squared insider ownership.

OLS on Tobin's Q: Tobin's Q decreases significantly with board outsiders, leverage, and corporate control activity. It increases significantly with insider ownership. 2SLS on Tobin's Q: Tobin's Q decreases significantly with board outsiders. 2SLS without Tobin's Q: Shareholdings by blockholders and institutional investors increases significantly by corporate control activity. Institutional ownership decreases significantly with blockholder ownership and vise versa. Leverage increases significantly with insider ownership and outside board membership but not vise versa. Years of CEO employment decreases significantly with institutional and blockholder ownership, but not vise versa.

The 'natural selection' argument.

Agrawal and Mandelker [1990], Journal of Financial and Quantitative Analysis

356 US listed firms who announced adoption of antitakeover charter amendments.


1) % ownership by all institutional shareholders. 2) Concentration of institutional ownership by a Herfindal index. 3) % ownership by two largest 5% blockholders. 4) Insider ownership by managers and directors.

41-days cumulative abnormal return, CAR, by the firm over the interval (AD-40, AD+1) where AD is the announcement date.

1) Size by log of stock market value. 2) Dummies for the different types of antitakeover amendments.

Event-study. OLS regression. Checks for simultaneous effect of type of amendment and % institutional ownership by including interaction terms.

CAR decreases significantly with the adoption of antitakeover amendments. CAR increases for increasing institutional ownership, concentration of institutional ownership, and ownership by 5% blockholders. However, no evidence of a difference in CAR for different levels of insider ownership. The OLS regression confirms the above results regarding institutional and insider ownership. It also shows a higher decrease in CAR the more entrenching the amendments.

The entrenchment argument. Note that managers can entrench themselves using anti-takeover provisions instead of stock ownership.

Baesel and Stein [1979], Journal of Financial and Quantitative Analysis

Canadian data





Find that managers make abnormal returns when trading in their firm's stock.


Barclay and Holderness [1991], The Journal of Finance


Presence of large-block equity holder or not.

Abnormal returns


Event study.

Significant and positive performance on announcement of outsiderís acquisition of a large equity position, but only persistent if takeover or other corporate restructure follows.

The incentive alignment argument.

Bothwell [1980], Journal of Industrial Economics

150 large industrial US firms from the Fortune 500.


As Palmer [1973].

MC £10% single block of common stock.

30%>WOC >10%.

SOC 30%.


1) A risk adjusted return on sales. 2) Return on equity.

Monopoly power by barriers to entry or market share.

Use binary regression equivalent of a two-way analysis of variance with interactions. The sample is classified in order to control for monopoly power.

Among firms with a large degree of monopoly power WOC and AOC firms are significantly more profitable than MC firms if the risk adjusted measure of return is used. Otherwise not.

The incentive alignment argument coupled with a competition argument.

Boyle, Carter and Stover [1998], Journal of Financial and Quantitative Ananlysis






Find that insider ownership is weakly (10% level) negatively related to the number of anti-takeover provisions at levels of ownership below 10,3%. This is evidence of substitution between two entrenchment mechanisms.


Boudreaux [1973], Southern Economic Journal

As Monsen et al [1968]: 72 firms of the 500 largest US industrial firms. 1952-63.

MC £5% single block of voting control.

OC 10% and evidence of active control, or, 20%.

As Monsen et al [1968]:

Return on equity. Observed 1952-63.

1) Industry type by major product. 2) Size of firm by sales.


Analysis of variance and covariance analysis.

The results are similar to Monsen et al. [1968] since their studies are almost identical. Boudreaux, however, is also interested in risk issues.

The incentive alignment argument.

Bradley and Wakeman [1983], Journal of Financial Economics

# of privately negotiated share repurchases.





For repurchases marking the termination of a takeover bid the non-participating shareholders take a highly significant loss of 13%.


Brickley, Lease and Smith [1988], Journal of Financial Economic






Institutional shareholders vote more actively on antitakeover amendments than other shareholders and they more actively oppose proposals that seem harmful to shareholders. This could hint a positive relation between institutional ownership and corporate performance.


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[1] Some of the studies have investigated other issues as well, such as, the relation between ownership structure and the risk of the firmís performance.

[2] The reported period typically refers to the maximum period that a particular study applies. Often the performance variables are collected over the entire period, whereas the ownership variables and control variables are collected at one year in the investigated period. All studies use publicly traded firms (unless otherwise described), because they are easier to get information about.

[3] Abbreviations: Management control (MC); Ownership control (OC); Owner managed (OM); External control (EC); Strong owner control (SOC); Weak owner control (WOC); All owner control (AOC); Financial control (FC); Majority held (MH); Diffusely held (DH).

[4] The ownership variable is typically measured as concentration of ownership on a particular set of owners, e.g. ownership by managers or institutional investors.

[5] This colon includes 1) independent control variables, 2) dependent variables that are not performance or ownership variables, and 3) variables used for sample classification.