Pre-Going Private Ownership Around the World

Cumming, Douglas J.; Peter, Rejo; Sannajust, Aurélie; Tarsalewska, Monika

doi:10.2139/ssrn.2724511

Cited by 2 publications

(2 citation statements)

References 63 publications

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“…We generate ownership measures based on the ownership data delivered by ORBIS. For each firm, we use information on its direct shareholders (Cumming, Peter, Sannajust, & Tarsalewska, 2018).…”

Section: Data and Samplementioning

confidence: 99%

“…Finally, there is some evidence that the main strategic decisions in the life cycle of the firm, such as going public or private, may be affected by the distribution of ownership. For instance, Cumming et al (2018) show that different types of blockholders have dissimilar predispositions to go private. This paper considers the roles of multiple blockholders without addressing any particular firm strategic decision.…”

Section: Limitations and Future Research Suggestionsmentioning

confidence: 99%

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Unveiling the role of multiple blockholders: Evidence from closely held firms

Russino

Picone

Dagnino

2019

Corporate Governance

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Research Question/Issue: This paper disentangles how the modes of ownership distribution among multiple blockholders and their heterogeneity shape principalprincipal conflicts and, in turn, affect firm performance. The paper offers empirical evidence from a panel of Italian closely held firms over the period 2009-2014. Research Findings/Insights:We explore the principal-principal conflicts among blockholders across two distinct control structures. When a single blockholder controls the firm, principal-principal conflicts are shaped by the trade-off between the alignment effect and the monitoring effect. In this scenario, we find that the relationship between the two largest blockholders' ownership concentration and firm performance is U-shaped. Furthermore, we show that heterogeneity across the two largest blockholder types has a negative effect on performance. In the absence of a controlling blockholder, firm control is usually obtained by forming coalitions, and principalprincipal conflicts involve the blockholders inside the controlling coalition and the other shareholders. We find that the ownership distribution and heterogeneity across blockholder types are negatively related to the size of controlling coalitions, and in turn, the size of controlling coalitions is positively correlated with firm performance.Theoretical/Academic Implications: We contribute to the principal-principal segment of agency theory by showing that the presence of a controlling blockholder is a key variable that alters the relationship between blockholders' ownership concentration and corporate performance, as well as the relationship between heterogeneity across the largest blockholders and firm performance.Practitioner/Policy Implications: Our findings across control structures in which multiple blockholders are present suggest that blockholders take different roles depending on the control structure in which they are involved. The implications of these findings relate to the design of the ownership structure of a firm.

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Section: Data and Samplementioning

confidence: 99%

Section: Limitations and Future Research Suggestionsmentioning

confidence: 99%

Unveiling the role of multiple blockholders: Evidence from closely held firms

Russino

Picone

Dagnino

2019

Corporate Governance

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Financial constraints in family firms and the role of venture capital

Croce

Martí

2016

Econ Polit Ind

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Based on the natural reluctance of family-controlled firms (FCFs) to accept external shareholders, in this paper we analyze whether investment sensitivity to internally generated cash flow is a driver of venture capital (VC) participation in those firms. We argue that FCFs are more likely to accept external investors when they are subject to serious financial constraints. We also aim to ascertain to what extent VC involvement contributes to reducing the dependency between investments and internal cash flow. We focus on a representative sample of Spanish privately held FCFs that received the initial VC investment between 1997 and 2006, and compare the investment-cash flow sensitivity of VC-backed FCFs with that of non VC-backed FCFs. We find that FCFs that received VC were more financially constrained than other similar non VC-backed FCFs before receiving VC. This finding is especially true in first generation FCFs, thus providing additional evidence on the reluctance of FCFs to accept external shareholders. We also find that VC-backed FCFs, in particular first generation ones, significantly reduce the sensitivity of investments to cash flow after the initial VC round

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Pre-Going Private Ownership Around the World

Cited by 2 publications

References 63 publications

Unveiling the role of multiple blockholders: Evidence from closely held firms

Unveiling the role of multiple blockholders: Evidence from closely held firms

Financial constraints in family firms and the role of venture capital

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