Private Benefits, Block Transaction Premiums and Ownership Structure

30 Pages Posted: 3 Apr 2000

See all articles by Alessandro Sembenelli

Alessandro Sembenelli

University of Turin - Department of Economics and Financial Sciences G. Prato

Giovanna Nicodano

University of Turin - Department ESOMAS; Collegio Carlo Alberto; CEPR; EGCI; Netspar

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Date Written: January 2000

Abstract

A simple parametric model shows that neither price premiums nor standardized block premiums measure private benefits, because they are affected by both the expected change in profits and the transfer of control effectively taking place with the block. The latter depends not only on the fractional size of the block, but on the whole distribution of shareholdings. The model is used to estimate control rents out of a sample of Italian block transactions. In this application, we measure the control transfer as the difference in the seller's (the buyer's) power index before and after the transaction. The sensitivity of private benefits to net worth, leverage and non-voting shares is examined. Finally, we show how to forecast the price of out-of-sample blocks of shares on the basis of information on company capital and ownership structure.

JEL Classification: C51, G12, G32, G34

Suggested Citation

Sembenelli, Alessandro and Nicodano, Giovanna, Private Benefits, Block Transaction Premiums and Ownership Structure (January 2000). Available at SSRN: https://ssrn.com/abstract=212248

Alessandro Sembenelli

University of Turin - Department of Economics and Financial Sciences G. Prato ( email )

C. so Unione Sovietica, 218 Bis
Torino, 13820-4020
Italy
+39 011 670 6059 (Phone)
+39 011 670 6062 (Fax)

Giovanna Nicodano (Contact Author)

University of Turin - Department ESOMAS ( email )

Turin, 10134
Italy

HOME PAGE: http://https://www.carloalberto.org/person/giovanna-nicodano/

Collegio Carlo Alberto ( email )

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Torino, Torino 10121
Italy
390116705006 (Phone)

HOME PAGE: http://https://www.carloalberto.org/person/giovanna-nicodano

CEPR ( email )

London
United Kingdom

EGCI ( email )

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

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

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