Firm or Private Value: What is Behind the Creation of Multiple Blockholder Structures?

Abstract:     
The aim of the paper is to delve beyond the mere institutional explanation of the observed ownership dynamic in Slovenia. Therefore, we check whether certain firm-specific, industry and owner-specific factors have been driving the transfer of ownership rights in the post-privatisation period and analyze the impact of the observed changes on firm performance. In order to account for the differences in regulation and in the ability of the existing owners to preserve their rents in corporate voice and returns, we distinguish between listed and non-listed firms and between several types of owners. Our empirical results are in line with theoretical predictions regarding the evolution of the ownership structure in firms (Zwiebel, 1995; Bebchuk and Roe, 1996), functioning and constitution of blockholder coalitions and their effects on firm value (Gomes and Novaes, 2005; Hansmann, 1996; Bennedsen and Wolfenson, 2000). The empirical analysis focuses on Slovenian firms but provides conclusions that, in our view, could be easily extended to other firms undergoing privatisation.

Number of Pages in PDF File: 28

Keywords: corporate governance, blockholders, shareholders coalitions, benefits of control

JEL Classification: G32,G34

working papers series