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Dynamic Ownership, Private Benefits, and Stock Prices

Corvino, R. (2018). Dynamic Ownership, Private Benefits, and Stock Prices. .

Abstract

I quantify largest shareholders’ private benefits of control, and their impact on stock prices, by estimating a structural model of optimal shareholding using data on the ownership dynamics of Italian public companies. The results show that controlling shareholders (i) extract private benefits on average around 2% of equity value, and (ii) generally have positive and persistent impact on stock prices. The results imply that large shareholders extract private benefits without cost for the rest of the company shareholders. I also provide evidence of a synergistic effect when the large shareholder is a corporation.

Publication Type: Monograph (Working Paper)
Publisher Keywords: Private benefits of control, Large shareholder, Ownership dynamics, Structural estimation, Stock price
Subjects: H Social Sciences > HF Commerce
H Social Sciences > HG Finance
Departments: Cass Business School > Finance
URI: http://openaccess.city.ac.uk/id/eprint/20836
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