Value of Corporate Control: Some International Evidence

Abstract

Existing literature shows that the market values control because controlling shareholder can generate private benefits and improve the efficiency of the corporation. In this study, we provide a measure of the value of control for a set of domestic and foreign transactions. Our measure of the value of control is the difference between the offer premium for minority and comparable majority transactions. We find that the median control premiums in the United States are around 30%. The control premium in "market-oriented" countries is higher than that for the "bank-oriented" countries. Also, we find that the premiums are lower in "cross-border" transactions relative to "domestic transactions."

Keywords: Corporate control, control premium

JEL Classification: G00