How Does Ownership Structure Affect Firm Value? A Comparison Using Different Corporate Governance Systems

Abstract

This paper studies how the main institutional factors characterizing corporate governance systems around the world affect the relationship between ownership structure and firm value. Our study gives rise to the following findings. First, ownership concentration and insider ownership levels are determined by several institutional features such as investor protection, development of capital markets, activity of the market for corporate control, and effectiveness of boards. Second, the relationship between ownership concentration and firm value is not directly affected by these institutional factors. Third, there is, however, a direct influence of corporate governance characteristics on the relationship between insider ownership and firm value.

Keywords: corporate governance, insider ownership, ownership concentration, institutional features

JEL Classification: G12, G32, G34, G38