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The road to shareowner power
(1999)
A dramatic rise in shareowner power and improvements in corporate governance tan be achieved in the next few years by expanding the role of proxy advisory firms. This will require changing the way such firms are paid. They are now paid directly by investors who buy their advice; but this arrangement suffers from a free-rider problem. Instead, they should be paid by each corporation about which they are advising, in accordance with shareholder vote so as to preclude management influence. This arrangement would make it economically feasible for advisory firms to expand their services, becoming proactive like relational investors. Any proxy advisor other than the market leader Stands to gain tremendously by initiating this new System. lt would eliminate the natura1 monopoly feature of the current System, and spread the tost more equitably across all shareowners. lt would also enable proxy advisory ftrms to market their Services to individual investors via the internet.
This paper analyzes the impact of blockownership dispersion on firm value. Blockholdings by multiple blockholders is a widespread phenomenon in the U.S. market. It is not clear, however, whether dispersion among blockholder is preferable to having a more concentrated ownership structure. To test for the direction of the effect, we use a large dataset of U.S. firms that combines blockholder information, shareholder rights information, debt ratings, accounting information, and financial markets information. We find that a large fraction of aggregated block ownership negatively affects Tobin’s Q. The negative impact is larger if blockowners are more dispersed, suggesting that a concentrated ownership structure is to be preferred on average. Results are robust to controlling for blockholder type as well as proxies for shareholder rights. Our empirical findings are also confirmed if we study the impact of ownership dispersion on firm debt ratings rather than Tobin’s Q. JEL Classification: G3, G32
This paper studies the impact of the concentration of control, the type of controlling shareholder and the dividend tax preference of the controlling shareholder on dividend policy for a panel of 220 German firms over 1984-2005. While the concentration of control does not have an effect on the dividend payout, there is strong evidence that the type of controlling shareholder matters as family controlled firms have high dividend payouts whereas bank controlled firms have low dividend payouts. However, there is no evidence that the dividend preference of the large shareholder has an impact on the dividend decision. JEL Classification: G32, G35 Keywords: Dividend Policy, Payout Policy, Lintner Dividend Model, Tax Clientele Effects, Corporate Governance