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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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6 Empirical Analyses


6      Empirical Analyses

The following chapter empirically addresses the research question of whether and how ownership structure affects performance.156 Two aspects of ownership are examined: First, Section 6.1 deals with the effect of ownership concentration. Second, Section 6.2 examines the impact of owner identity. Finally, Section 6.3 conflates the two effects to a combined model in order to capture the effect of ownership concentration as a function of the identity of owners. The analyses include an adequate testing of the hypotheses developed in Chapter 3 and take reference to major findings and approaches reviewed in Chapter 4. Special attention is being paid to the differences of various econometric approaches, as discussed in Chapter 5, and their consequences for the empirical results and the interpretation of findings. Section 6.4 closes the chapter with a summary and discussion of results.

6.1      Ownership Concentration Effects

In the following section, the performance effect of ownership concentration, that is, the existence and strength of controlling shareholders, is assessed. The analyses consist of a base case as well as econometric variations of this.

6.1.1      Base Case

The base case analyzes linear effects of ownership concentration on performance, assuming a model with fixed effects.      Linear Within-Regression Results

Table 6.1 presents the within-regression results for ownership concentration models, using cluster-robust standard errors. Models 1.1-1.6 use Tobin's Q as the dependent variable and apply six alternative measures of ownership concentration. The results find the...

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