Dominant Owners and Financial Performance of Continental European Firms

46 Pages Posted: 4 Mar 2011

See all articles by Victoria Krivogorsky

Victoria Krivogorsky

San Diego State University

F. Greg Burton

Brigham Young University - School of Accountancy

Date Written: February 1, 2011

Abstract

We examine countries in continental Europe to further refine the distinction between ability to control and actual control and whether a particular distinct shareholder distribution relates to company performance. As an extension to the existing literature, we provide a more nuanced taxonomy of controlling shareholder systems in different countries. In particular, we (1) operationalize the definition of “dominant” owner, to make this measure less sensitive to the disparity of voting and cash flow rights and (2) empirically test the active power of the dominant owners by investigating whether the economic performance of the firms from different countries is consistently affected by the nature of the company’s dominant owner. After disaggregating the overall sample by specific ownership type and by country, we find statistical support for the relationship between dominant ownership and performance being strongly positive for firms in which banks and families/individuals are dominant owners to being inversely related (p ≤ 0.1) when corporations are the dominant owners. Additional analysis discloses an even more complicated picture, suggesting that countries are not homogenous in terms of their ownership landscapes, and, hence, their effects on performance.

Keywords: accounting performance returns, corporate governance, dominant owners, regulatory environments

JEL Classification: M41, G32, G34, G15

Suggested Citation

Krivogorsky, Victoria and Burton, Fielding Greg, Dominant Owners and Financial Performance of Continental European Firms (February 1, 2011). Available at SSRN: https://ssrn.com/abstract=1086469 or http://dx.doi.org/10.2139/ssrn.1086469

Victoria Krivogorsky (Contact Author)

San Diego State University ( email )

San Diego, CA 92182-0763
United States

Fielding Greg Burton

Brigham Young University - School of Accountancy ( email )

Provo, UT 84602
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
466
Abstract Views
3,495
rank
80,748
PlumX Metrics