Does Ownership Matter in the Presence of Strict Antiactivism Legislation? Evidence from Equity Transactions in Denmark
Posted: 3 Apr 2008
This study analyzes the effects of institutional and strategic investor equity transactions on the behavior of stock prices on the Copenhagen Stock Exchange (XCSE). Unlike the positive relationship between managerial ownership and security performance, we find that the relationship between ownership and performance is a bell-shaped curve. There is an optimal threshold level of ownership at which security performance, measured by abnormal returns, is maximized. At the threshold level, the management can take advantage of the shared benefit of control. Beyond the threshold level of ownership, the security performance decreases. We attribute this threshold level to an increasing entrenchment benefit.
Keywords: Corporate governance, Ownership structure, Equity transactions, Institutional and strategic investors
JEL Classification: G14, G32
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