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Ownership Structure and Corporate Performance

A Panel Data Analysis for the German Market


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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4 Related Literature


4      Related Literature

4.1      Introduction

As the variety of arguments brought forward shows, the relation between ownership and performance is complex. Theoretical arguments alone cannot unambiguously predict whether benefits of concentrated ownership outweigh its costs, or whether certain groups of owner identity have a more positive or more negative impact on company performance than others. Empirical research hence becomes important to examine which of the logically possible explanations is the most probable. The following chapter therefore presents the findings of major empirical studies. First, Section 4.2 addresses potentially moderating factors. Section 4.3 then reviews and evaluates the existing research on ownership structure and performance.

4.2      Moderating Factors

The empirical research on the effects of ownership on firm performance spans several decades and is still subject to controversy. The great variance in empirical evidence is in particular owing to three moderating effects (Hu & Izumida, 2008; Sáchez-Ballesta & García-Meca, 2007): the underlying corporate governance system, the applied measures of performance and ownership concentration, and the econometric techniques applied.

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