Does State Ownership Hurt or Help Minority Shareholders?
International Evidence from Control Block Acquisitions
We argue that state ownership is a crucial policy instrument for alleviating what is perhaps the most important principal-principal (PP) agency problem around the globe: private benefits of control (PBC). Our results illustrate that states reduce PBC in the companies in which they acquire controlling ownership positions. We also examine how legal and political institutions influence the extent to which states accomplish this goal. Anti-self-dealing legal regulations make states more effective in their efforts to constrain PBC, while political constraints make them less effective. Regimes with high state capacity appear not to prioritize PBC reduction. We test and corroborate these ideas in a sample of 1,354 control transactions across 54 countries.
|Keywords||Control transactions, legal institutions, political institutions, private benefits of control, state ownership|
|Journal||Global Strategy Journal|
Heugens, P.P.M.A.R, Sauerwald, S, Turturea, R, & van Essen, M. (2018). Does State Ownership Hurt or Help Minority Shareholders?. Global Strategy Journal, Accepted. Retrieved from http://hdl.handle.net/1765/112165