Ownership Structure and Minority Expropriation in Non-Listed Firms: The Case for Multiple Large Shareholders

Abstract:     
This paper investigates minority expropriation problems in closely-held corporations, where control is shared by a small number of blockholders. Using a large sample of Spanish fi rms for the years 1996 through 2000, we fi nd that fi rms whose characteristics make them more vulnerable to minority expropriation tend to have controlling groups with stakes that are far removed from the 50% threshold, where expropriation is higher. However, because of adjustment costs, fi rms do not achieve an optimal ownership structure. Performance improves when the controlling group's ownership stake is higher and, for a given ownership stake, when the number of group members increases.

Keywords: corporate ownership, multiple large shareholders, corporate performance, private benefi ts, minority expropriation, non listed firms

JEL Classifications: G32

Working Paper Series