Effects of corporate equity ownership on firm value

Drees, Friedel; Mietzner, Mark; Schiereck, Dirk

doi:10.1007/s11846-012-0080-2

Cited by 19 publications

(16 citation statements)

References 60 publications

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“…Lim and Cu (2012) base their analysis on social network and contract characteristics and notice that entrepreneurs' private benefits affect the cooperation and control right sharing between entrepreneurs and VCs. Drees, Mietzner and Schiereck (2013) find that firm value is an important indicator of control right structure, and the private benefits of new shareholders also matter for control rights.…”

Section: Introductionmentioning

confidence: 93%

Specificity and exclusiveness of human capital and corporate control in Chinese entrepreneurial firms

Wang

Yang

2018

South African Journal of Business Management

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Background: Entrepreneur was the key factor of venture capital-backed star-ups, and control rights serve as an important incentive to attract entrepreneurs' human capital investment.Objective: In this article, we investigate the ways in which the specificity and exclusiveness of entrepreneurs' human capital impact the allocation of residual control right (RCR) and specific control right (SCR) in entrepreneurial firms, based on the comprehensive effect of various control right benefits.Methods: Using panel data for a mixed regression model, we test theoretical hypotheses with survey data collected from entrepreneurial firms in various industries in China.Results: We find that when the venture capitalist's (VC) strategic benefits are less than the entrepreneur's private benefits, the VC's RCR is negatively related to the specificity of the entrepreneur's human capital and is positively related to the exclusiveness of the entrepreneur's human capital. The VC's SCR is positively related to the specificity and is negatively related to exclusiveness. When the VC's strategic benefits are greater than the entrepreneur's private benefits, the VC's RCR is positively related to the specificity of the entrepreneur's human capital and is negatively related to the exclusiveness. The VC's SCR is positively related to both the specificity and exclusiveness. Conclusion:The impacts of specificity and exclusiveness of human capital are more significant for high-tech companies than for traditional companies. It is necessary for different types of VC-backed firms to implement classified governance over the control rights.

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Section: Introductionmentioning

confidence: 93%

Specificity and exclusiveness of human capital and corporate control in Chinese entrepreneurial firms

Wang

Yang

2018

South African Journal of Business Management

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“…To predict the risk of information asymmetry, we follow Faccio and Masulis (2005) and Eckbo et al (2018) using deal-specific features, such as Crossindustry, Cross-border, and Unlisted Target. Cross-industry is a dummy variable equal to 1 if acquirers and targets are from different industries, measured by twodigit SIC codes (Drees et al 2013). Cross-border is a dummy variable equal to 1 if acquirers and targets are from different countries.…”

Section: Overvaluation and Misvaluation Measuresmentioning

confidence: 99%

The rationality of M&A targets in the choice of payment methods

Klitzka

Schiereck

2021

Rev Manag Sci

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This study analyzes mergers and acquisitions (M&A) payment methods in large transactions of public U.S. acquirers between 2009 and 2016. While we find consistent with previous evidence that asymmetric information between acquirers and targets significantly influences the choice of M&A payment methods, we show that contrary to prevailing findings in the literature, acquirers cannot exploit their overvaluation through stock-financed M&A at targets’ disadvantage. In addition, when facing larger uncertainty in the counterparty’s valuation, a higher ratio of cash is applied in M&A payment. Our results document that both acquirers and targets are rational in choosing M&A payment methods.

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“…Common reasons for corporate investments are to realize synergies or to gain access to the target's technology (Drees et al., 2013). For example, previous studies find that corporate blockholders are common when the target company invests in research and development (Fee et al., 2006) and when the products of the blockholder and the target company are complementary (Clayton & Jorgensen, 2011).…”

Section: Theoretical Framework and Empirical Predictionsmentioning

confidence: 99%

Ownership concentration, ownership identity and seasoned equity offerings probabilities: Evidence from Germany

Rojahn

Zechser

2021

Business Fin & Account

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This study analyzes the effect of ownership concentration and ownership identity on the probability of seasoned equity offerings (SEOs) in the German stock market. In Germany, equity issues require shareholder approval by a supermajority vote of 75% at shareholder meetings. This study contributes to the literature by testing the non‐monotonic effect of ownership concentration on the SEO probability. While low levels of ownership concentration can be expected to increase SEO probabilities, for example, through signaling effects, high levels of ownership concentration beyond the 25% blocking minority imply a negative effect, likely driven by the largest shareholder's willingness to maintain control. After constructing a control group using propensity score matching, we find that SEO likelihood is positively affected by the ownership concentration of the largest shareholder, as long as the 25% blocking threshold is not reached, regardless of the largest shareholder's identity. However, once this threshold is exceeded, the SEO likelihood decreases significantly as the equity stake of the largest shareholder increases. Nonetheless, when we control for the identity of the owners with equity stakes above the 25% threshold, the negative effects are predominantly not statistically significant at common levels.

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Effects of corporate equity ownership on firm value

Cited by 19 publications

References 60 publications

Specificity and exclusiveness of human capital and corporate control in Chinese entrepreneurial firms

Specificity and exclusiveness of human capital and corporate control in Chinese entrepreneurial firms

The rationality of M&A targets in the choice of payment methods

Ownership concentration, ownership identity and seasoned equity offerings probabilities: Evidence from Germany

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