The Ownership Structure of Private Firms: Concentration and Persistence

41 Pages Posted: 5 Sep 2019

See all articles by Øyvind Bøhren

Øyvind Bøhren

BI Norwegian Business School

Diana‐Cristina Iancu

Statistics Norway

Georgiana Radulescu

Tomra Systems ASA

R. Øystein Strøm

OsloMet - Oslo Metropolitan University

Date Written: September 4, 2019

Abstract

We find that ownership concentration is much larger in private firms than in public firms, much more persistent, and changes more once change happens. Analyzing the population of Norwegian firms during fifteen years, we show that the average largest owner of a private (public) firm holds 49% (26%) of the equity, holds the same stake in two consecutive years in 82% (14%) of the cases, and alters the stake by 9(8) percentage units when the stake changes. These differences are greater when the largest owner is a family. This evidence suggests that control rights in private firms provide particularly high benefits that are costly to trade. We use system GMM to show that the strong persistence of ownership makes past ownership dominate any other determinant of current ownership proposed in the literature, and that the relationship becomes highly misleading if we use economic models or econometric techniques that ignore ownership persistence. These findings also suggest that ownership can be considered an exogenous determinant of economic outcomes in private firms.

Keywords: Ownership, Concentration, Persistence, Dynamics, Private Firms, Family Firms, System Gmm, Register Data

JEL Classification: G30, G32

Suggested Citation

Bøhren, Øyvind and Iancu, Diana‐Cristina and Radulescu, Georgiana and Strøm, Reidar Øystein, The Ownership Structure of Private Firms: Concentration and Persistence (September 4, 2019). Available at SSRN: https://ssrn.com/abstract=3448071 or http://dx.doi.org/10.2139/ssrn.3448071

Øyvind Bøhren (Contact Author)

BI Norwegian Business School ( email )

Nydalsveien 37
Oslo, 0442
Norway
46410503 (Phone)

Diana‐Cristina Iancu

Statistics Norway ( email )

N-0033 Oslo
Norway

Georgiana Radulescu

Tomra Systems ASA ( email )

Norway

Reidar Øystein Strøm

OsloMet - Oslo Metropolitan University ( email )

P.O. Box 4
Oslo, 0130
Norway
+47 97968500 (Phone)

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