Does Ownership Matter in the Presence of Strict Antiactivism Legislation? Evidence from Equity Transactions in Denmark

Posted: 3 Apr 2008

See all articles by Robert Neumann

Robert Neumann

Danske Bank - Danske Markets

Torben Voetmann

The Brattle Group; University of San Francisco

Abstract

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

Suggested Citation

Neumann, Robert and Voetmann, Torben, Does Ownership Matter in the Presence of Strict Antiactivism Legislation? Evidence from Equity Transactions in Denmark. International Review of Financial Analysis, Vol. 12, No. 2, 2003. Available at SSRN: https://ssrn.com/abstract=1115944

Robert Neumann (Contact Author)

Danske Bank - Danske Markets ( email )

Holmens Kanal 2-12
DK-1092 Copenhagen K
Denmark

Torben Voetmann

The Brattle Group ( email )

201 Mission Street
Suite 2800
San Francisco, CA 94105
United States
415-217-1000 (Phone)

HOME PAGE: http://www.brattle.com

University of San Francisco ( email )

2130 Fulton Street
San Francisco, CA 94117
United States

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