Disentangling the Incentive and Entrenchment Effects of Large Shareholdings

Disentangling the Incentive and Entrenchment Effects of Large Shareholdings

  • Stijn Claessens
  • Simeon Djankov
  • Joseph P. H. Fan
  • Larry H. P. Lang

Article first published online: 17th December 2002 DOI: 10.1111/1540-6261.00511

Abstract


This article disentangles the incentive and entrenchment effects of large ownership. Using data for 1,301 publicly traded corporations in eight East Asian economies, we find that firm value increases with the cash‐flow ownership of the largest shareholder, consistent with a positive incentive effect. But firm value falls when the control rights of the largest shareholder exceed its cash‐flow ownership, consistent with an entrenchment effect. Given that concentrated corporate ownership is predominant in most countries, these findings have relevance for corporate governance across the world.

Sign in to access the full article.

Related articles


Front Matter

Article first published online: 29th January 2016 / DOI: 10.1111/j.1540-6261.2002.tb00685.x

Read Article

ANNOUNCEMENTS

Article first published online: 29th January 2016 / DOI: 10.1111/j.1540-6261.2002.tb00686.x

Read Article

ASSOCIATION MEETINGS

Article first published online: 29th January 2016 / DOI: 10.1111/j.1540-6261.2002.tb00687.x

Read Article

Back Matter

Article first published online: 29th January 2016 / DOI: 10.1111/j.1540-6261.2002.tb00688.x

Read Article

Learning about Internal Capital Markets from Corporate Spin‐offs

  • Robert Gertner
  • Eric Powers
  • David Scharfstein

Article first published online: 17th December 2002 / DOI: 10.1111/1540-6261.00503

Read Article

Tunneling or Value Added? Evidence from Mergers by Korean Business Groups

  • Kee‐Hong Bae
  • Jun‐Koo Kang
  • Jin‐Mo Kim

Article first published online: 17th December 2002 / DOI: 10.1111/1540-6261.00510

Read Article

Are you an Author?


Please read our submission requirements and find out how to submit your paper to the Journal of Finance

Submit a paper