Burkart, Mike and Panunzi, Fausto (2001) Agency conflicts, ownership concentration, and legal shareholder protection. Discussion paper, 378. Financial Markets Group, London School of Economics and Political Science, London, UK.
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This paper analyzes the interaction between legal shareholder protection, managerial incentives, and outside ownership concentration. Legal protection a¤ects both the expropriation of shareholders and the blockholder's incentives to monitor. Because of this latter e¤ect and its repercussion on managerial incentives, outside ownership concentration and legal shareholder protection can be both substitutes or complements. This holds irrespective of whether or not the large shareholder can reap private bene ts. Moreover, better legal protection may exacer- bate rather than alleviate the conflict of interest between large and small shareholders. In the extended framework with monetary incentives, ownership is fully dispersed when legal shareholder protection is strong. Otherwise, outside block ownership is optimal and is a substitute to legal protection when the law is of intermediate quality, while it is a complement when the law is poor.
|Item Type:||Monograph (Discussion Paper)|
|Additional Information:||© 2001 The Authors|
|Uncontrolled Keywords:||Corporate governance, Law and finance, Ownership structure|
|Library of Congress subject classification:||H Social Sciences > HG Finance
H Social Sciences > HB Economic Theory
|Journal of Economic Literature Classification System:||G - Financial Economics > G3 - Corporate Finance and Governance > G34 - Mergers; Acquisitions; Restructuring; Corporate Governance|
|Sets:||Research centres and groups > Financial Markets Group (FMG)
Collections > Economists Online
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