Equity Ownership and Firm Value in Emerging Markets

Posted: 10 Feb 2003

See all articles by Karl V. Lins

Karl V. Lins

University of Utah - Department of Finance

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Abstract

This paper investigates whether management ownership structures and large non-management blockholders are related to firm value across a broad sample of firms from emerging markets. I find that firm values are lower when control and cash flow rights of a firm's management group are separated, which indicates that the private benefits of control are reflected in the price paid by non-controlling shareholders. My results also suggest that large non-management blockholders can reduce these private benefits. The separation of management group ownership and control has a significantly more negative relation to value in countries with low shareholder protection, whereas large non-management blockholders have a significantly more positive relation. These results imply that private control benefits are discounted even more by minority shareholders where external shareholder protections are weak and that large non-management blockholders can act as a partial substitute for these missing institutional governance mechanisms.

JEL Classification: G32, G30

Suggested Citation

Lins, Karl V., Equity Ownership and Firm Value in Emerging Markets. Available at SSRN: https://ssrn.com/abstract=331320

Karl V. Lins (Contact Author)

University of Utah - Department of Finance ( email )

David Eccles School of Business
Salt Lake City, UT 84112
United States
801-585-3171 (Phone)
801-581-7214 (Fax)

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