Shareholder Rights and the Importance of Foreign Shareholders

16 Pages Posted: 16 Feb 2010 Last revised: 29 Oct 2010

See all articles by Christoph Van der Elst

Christoph Van der Elst

Tilburg Law School; Ghent University - Department of Business Law; European Corporate Governance Institute (ECGI)

Date Written: February 15, 2010

Abstract

In many countries shareholders were offered more rights to protect their position against “inappropriate” behaviour of other corporate constituents. Whether these developments resulted in more market participation and deeper and more liquid markets, as argued in law and finance theory, remained an open question. For a large sample of European listed companies we reveal part of the answer: we analyse the evolution of the investment behaviour of foreign shareholders in a large sample of European companies between 1999 and 2007. A steadily growing number of all large stakes belong to foreign shareholders. However, the average voting block of a foreign shareholder decreased in all countries but in Germany. The results show that the hypothesis of a straightforward inverse linear relationship between shareholder rights and ownership concentration is not confirmed. Other features drive the development of ownership structures. These factors are of a legal nature, like the mandatory bid threshold, or are more shareholder specific, like the investment contraints of UCITS.

Keywords: ownership structure, foreign shareholders, law and finance, legal regulation

JEL Classification: G32, G34, K22

Suggested Citation

Van der Elst, Christoph, Shareholder Rights and the Importance of Foreign Shareholders (February 15, 2010). TILEC Discussion Paper No. 2010-008, Tilburg Law School Research Paper No. 007/2010, Available at SSRN: https://ssrn.com/abstract=1553091 or http://dx.doi.org/10.2139/ssrn.1553091

Christoph Van der Elst (Contact Author)

Tilburg Law School ( email )

Tilburg, 5000 LE
Netherlands

Ghent University - Department of Business Law ( email )

Universiteitstraat 4
Gent, B-9000
Belgium

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

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