Foundation Ownership and Shareholder Value: An Event Study

Forthcoming Review of Managerial Science

29 Pages Posted: 5 Jun 2017 Last revised: 30 Jul 2018

See all articles by Ann‐Kristin Achleitner

Ann‐Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies

Dmitry Bazhutov

BUW - Schumpeter School of Business and Economics

André Betzer

BUW- Schumpeter School of Business and Economics

Jorn H. Block

University of Trier - Faculty of Management; Erasmus University Rotterdam (EUR) - Institute of Management (ERIM)

Florian Hosseini

University of Trier - Faculty of Management

Date Written: May 25, 2018

Abstract

Some of the largest listed firms in Western and Northern Europe are partly owned by foundations. So far, little research exists about the shareholder value effects of foundation ownership. This study aims to close this gap using an event study method. We find that equity markets show a positive reaction following the announcement by a foundation that it intends to decrease its ownership share, whereas we find no reaction when a foundation announces that it intends to increase its ownership share. The positive reaction to an announcement of an ownership share decrease is particularly strong when a foundation holds an equity stake of less than 25%. Further investigations show that our findings are specific for foundations as blockholders and do not occur with other blockholders. Overall, our study shows that equity markets are skeptical about foundations as shareholders. Future research is needed to determine whether this skepticism is due to monitoring problems of foundations, goal divergences between foundations and firms, foundations being hybrid organizations with multiple goals, or legal restrictions that come with this particular form of firm ownership.

Keywords: Blockholders, Event Study, Foundation-Owned Firms, Shareholder Value, Charitable Foundations

JEL Classification: G32, G34, L21

Suggested Citation

Achleitner, Ann-Kristin and Bazhutov, Dmitry and Betzer, André and Block, Jorn Hendrich and Hosseini, Florian, Foundation Ownership and Shareholder Value: An Event Study (May 25, 2018). Forthcoming Review of Managerial Science. Available at SSRN: https://ssrn.com/abstract=2980102 or http://dx.doi.org/10.2139/ssrn.2980102

Ann-Kristin Achleitner

Technische Universität München - Center for Entrepreneurial and Financial Studies ( email )

Arcisstr. 21
Munich, D-80290
Germany
+49 89 289 25181 (Phone)

Dmitry Bazhutov

BUW - Schumpeter School of Business and Economics ( email )

Gaußstraße 20
42097 Wuppertal
Germany

André Betzer (Contact Author)

BUW- Schumpeter School of Business and Economics ( email )

Gaußstraße 20
Wuppertal
Germany

HOME PAGE: http://finance.uni-wuppertal.de/index.php?id=1153

Jorn Hendrich Block

University of Trier - Faculty of Management ( email )

D-54296
Germany

Erasmus University Rotterdam (EUR) - Institute of Management (ERIM) ( email )

Burgemeester Oudlaan 50
3000 DR Rotterdam, Zuid-Holland 3062PA
Netherlands

Florian Hosseini

University of Trier - Faculty of Management ( email )

Germany

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