Large shareholder ownership, monitoring, and expropriation: Theory and evidence from large block share purchases.

摘要

This dissertation analyzes the large shareholder's incentives and impact on corporate value. Extending Demsetz (1983) and Demsetz and Lehn's (1985) work concerning the determinants of ownership structure, a theoretical model of the large shareholder's ownership, monitoring, and expropriation decisions is developed. The model incorporates the large shareholder's use of voting control to extract private benefits from management (Barclay and Holderness, 1989) and recognizes that the large shareholder's consumption of private benefits may enhance or diminish firm value. An event study examining 97 large block share purchases from 1988-1994, supports the model's predictions that firm value is increasing in the presence of exploitable synergies between the investor and the firm, as well as increasing in the shareholder's ownership stake. The attitude of the incumbent management towards the investor, however, has an ambiguous effect on firm value. There is strong support for the hypothesis that the investor's ownership stake is greater the more receptive management is to the purchase. The prediction that the investor's ownership stake is decreasing in the purchase value of the firm is also validated. Contrary to the model's prediction, the greater the synergy potential between the investor and the firm, the smaller the investor's optimal ownership stake.