Disentangling the Incentive and Entrenchment Effects of Large Shareholdings

  • Author(s): Stijn Claessens, Simeon Djankov, Joseph P. H. Fan, Larry H. P. Lang
  • Published: Dec 17, 2002
  • Pages: 2741-2771
  • DOI: 10.1111/1540-6261.00511

ABSTRACT

This article disentangles the incentive and entrenchment effects of large ownership. Using data for 1,301 publicly traded corporations in eight East Asian economies, we find that firm value increases with the cash‐flow ownership of the largest shareholder, consistent with a positive incentive effect. But firm value falls when the control rights of the largest shareholder exceed its cash‐flow ownership, consistent with an entrenchment effect. Given that concentrated corporate ownership is predominant in most countries, these findings have relevance for corporate governance across the world.

Jump to menu

Main Navigation

Search the Site / Journal

Search Keywords

Search Tips

Members' Login

Credentials

Members' Options

Site Footer

View Mobile Version