Ownership Structure and Corporate Performance

Posted: 31 Mar 2002

See all articles by Harold Demsetz

Harold Demsetz

University of California, Los Angeles (UCLA) - Department of Economics

Belen Villalonga

New York University (NYU) - Leonard N. Stern School of Business

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Abstract

This paper investigates the relation between the ownership structure and the performance of corporations if ownership is made multi-dimensional and also is treated as an endogenous variable. To our knowledge, no prior study has treated the corporate control problem this way. We find no statistically significant relation between ownership structure and firm performance. This finding is consistent with the view that diffuse ownership, while it may exacerbate some agency problems, also yields compensating advantages that generally offset such problems. Consequently, for data that reflect market-mediated ownership structures, no systematic relation between ownership structure and firm performance is to be expected.

The working paper version of this abstract can be accessed using the following URL: http://ssrn.com/abstract_id=266101

Keywords: ownership, performance

JEL Classification: G32, G34

Suggested Citation

Demsetz, Harold and Villalonga, Belen, Ownership Structure and Corporate Performance. Journal of Corporate Finance, Vol. 7, pp. 209-233, 2001. Available at SSRN: https://ssrn.com/abstract=304181

Harold Demsetz

University of California, Los Angeles (UCLA) - Department of Economics ( email )

Box 951477
Los Angeles, CA 90095-1477
United States
(310) 825-3651 (Phone)

Belen Villalonga (Contact Author)

New York University (NYU) - Leonard N. Stern School of Business ( email )

40 West 4th Street
Suite 9-160
New York, NY NY 10012
United States

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