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Ownership structure and economic performance in the largest european companies
Author(s) -
Thomsen Steen,
Pedersen Torben
Publication year - 2000
Publication title -
strategic management journal
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 11.035
H-Index - 286
eISSN - 1097-0266
pISSN - 0143-2095
DOI - 10.1002/(sici)1097-0266(200006)21:6<689::aid-smj115>3.0.co;2-y
Subject(s) - profitability index , shareholder , business , equity (law) , shareholder value , value (mathematics) , capital structure , asset (computer security) , return on equity , monetary economics , finance , accounting , financial system , corporate governance , economics , debt , computer security , machine learning , political science , computer science , law
The paper examines the impact of ownership structure on company economic performance in 435 of the largest European companies. Controlling for industry, capital structure and nation effects we find a positive effect of ownership concentration on shareholder value (market‐to‐book value of equity) and profitability (asset returns), but the effect levels off for high ownership shares. Furthermore we propose and support the hypothesis that the identity of large owners—family, bank, institutional investor, government, and other companies—has important implications for corporate strategy and performance. For example, compared to other owner identities, financial investor ownership is found to be associated with higher shareholder value and profitability, but lower sales growth. The effect of ownership concentration is also found to depend on owner identity. Copyright © 2000 John Wiley & Sons, Ltd.