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Table: Empirical
studies on ownership structure and performance[1]
A B C D E F G H I J K L M N O P Q R S T U V W X Y Z |
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Author(s) &Journal |
Sample
& Period[2]
|
Ownership |
Performance
variable(s) |
Other
variable(s): Controls & dependents[5] |
Statistical
methods |
Main
results |
Preferred
explanation |
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Palmer [1973], |
427 of the largest 1961-69. |
MC £10% single block
of common stock. 30%>WOC >10%. SOC ³30%. AOC=WOC+SOC |
Return on equity. Observed 1961-69. |
1) Monopoly power by barriers to entry. 2) Size of firm by revenues. |
Use Satterthwaite’s approximation. Corrects for heteroscedasticity by
statistical comparisons. The sample is classified in order to control for monopoly
power. |
Among firms with a large degree of monopoly power AOL and SOC firms
are significantly more profitable than MC firms. Otherwise not. |
The incentive alignment argument coupled with a competition argument. |
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Evidence that new blockholders help to increase the performance of MBOs and that old institutional blockholders has no effect. |
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Pope, Morris and Peel [1990], Journal of Business, Finance, and Accounting |
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Find that managers make abnormal returns when trading in their firm's
stock. |
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Dependent variable is one if management wins the proxy contest and
zero if dissident wins. |
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Logit regression. |
The probability that management will prevail in a proxy contest is
increasing with the fraction of shares held by institutional investors. This
could hint a negative relation between institutional ownership and corporate
performance. |
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Find that managers make abnormal returns when trading in their firm's
stock. |
The insider-investment argument. |
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86 large |
MC £5% single block
of voting control. OC ³15%. 16 firms are not defined. |
Return on equity. Observed 1957-67. |
1) Industry by type of major product. 2) Mean growth rate in net
assets 1957-67. 3) Size by net assets in 1957. |
OLS regression. |
OC firms are significantly (weak) more profitable than MC firms.
Growth is significant. Size and industry are not significant. |
The incentive alignment argument. |
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Round [1976], Rivista Internztionale
Di Scienze Economiche e Commercial |
289 large industrial Australian firms. 1962-64. |
1) Control types: MC <5% held by person. OC > 10% held by person. Company control ³15% held by
other company. 2) % shares held by top 20 shareholders. 3) Dummy for overseas
ownership and control. |
Return of assets. |
1) Number of directors. 2) Number of directors among top 20 shareholders.
3) Size by total assets. 4) Growth as % increase in shareholders funds. |
OLS regression. |
MC firms have insignificantly lower returns than OC and company
controlled firms. Significant controls:
Number of directors among top 20 shareholders is positive. |
The incentive argument. |
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698 trading events by insiders (i.e. officers and directors) and 622
trading events by outsiders using news on insider trades. 1973-82. |
1) Insiders trading by officers and directors: 2) Outsiders trading on public but delayed information on insiders'
trades from SEC's Official Summery. |
1) Standard cumulative abnormal return CAR (12 months). 2) CAR
adjusted for predictable firm size and earnings / price effects (12 months). |
The performance measure CAR is controlled for size and earning /
price effects and CAR is also calculated with and without 2% transaction
costs. |
Event-study. The sample is selected to sort out insider trades that
relate to portfolio rearrangement. CAR is calculated on portfolios maintained
by particular trading rules. |
Standard CAR with or without transaction costs is significant and
positive for both insiders and outsiders. Size and e/p adjusted CAR with or
without transaction costs is significant and positive for insiders but not
for outsiders. |
The insider-investment argument. |
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About 869 |
Insiders are defined as officers and directors: 1) The proportion of insider buying as the number of insider purchases to number of insider purchases and sales. 2) % of stocks by insiders. |
Use indirect measures in order to avoid problems with the CAP-model
or multifactor market models: 1) Stock return prior to insider sales. 2)
Ratio of cash flow to stock price. 3) Ratio of book value to price. |
None. |
Event-study. OLS regressions. |
The proportion of insider buying is significantly decreasing with
prior stock returns. No significant effect of regressing insider holdings
against cash flow to stock price. The proportion of insider buying is significantly
increasing with the ratio of cash flow to stock price (as well as book value
to stock price). |
The insider-investment argument. |
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- Copyright 1997-2010, ViamInvest. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Legal notice. |
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