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Ownership Structure and Corporate Performance

A Panel Data Analysis for the German Market

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Katinka Wölfer

The book sheds new light on the relation between equity ownership and corporate performance. Empirical studies presented in this book are based on a large panel data set and model the impact of concentrated ownership on performance, with nonlinear effect shapes being estimated through cubic splines. The final model incorporates the identity of owners into the investigation and illustrates the differing performance effects of various large shareholders. This approach adds to the understanding of ownership effects as previous research was mainly concerned with the role of ownership concentration and neglected the identity of blockholders as an equally important dimension of ownership. The new perspective will give fresh impetus to researchers, corporate decision makers and public policy.
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2 Characteristics of Ownership Structure and Performance

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2    Characteristics of Ownership Structure and Performance

2.1      Introduction

To introduce the subject, the following chapter takes a close look on the characteristics of ownership structure and performance and discusses general aspects as well as means of measurement. This will form the basis for the selection of variables for the empirical analyses. First, the concept of ownership structure is examined. Ownership is commonly considered a multidimensional construct, which cannot be mirrored by a single variable and instead is characterized by the two dimensions ownership concentration and owner identity: Ownership concentration renders quantitative information on ownership, whereas owner identity reveals qualitative information about the type of shareholder. Sections 2.2 and 2.3 elaborate on these two dimensions of ownership. The subsequent Section 2.4 then discusses various measures of performance and their appropriateness for empirical studies on the effect of corporate ownership structure.

2.2      Concentration of Ownership

Central to the concept of ownership is the definition and measurement of ownership concentration. This is by far the most widely researched dimension of ownership.

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