The Persistent Ownership Structure of Private Firms

Abstract

We find that ownership changes much less over time in private firms than in public firms. The average largest shareholder in private (public) Norwegian firms keeps the same stake in 82% (14%) of two consecutive years. In private firms past ownership dominates ownership determinants proposed in the literature, and the estimated relationship depends heavily on whether the economic model and the econometric technique capture the strong ownership persistence. This evidence suggests that lower share liquidity increases ownership duration, and that feed-back from economic outcomes to ownership structure is a less severe problem for identification when the firm's shares are illiquid.

Keywords: ownership, concentration, persistence, dynamics, duration, illiquidity, private firms, family firms, identification, system GMM, register data.

JEL Classification: G30, G32