Equity Block Transfers in Transition Economies

Evidence from Poland

G. Trojanowski

Research output: Book/ReportReportProfessional

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Abstract

This Paper investigates valuation effects of share block transfers and employs agency theory to explain the determinants of block premia. A sample of transactions from Poland is used to measure benefits and costs of ownership concentration. Block premia are found to be substantially lower than in well-developed markets, in spite of the insufficient minority shareholders' protection in transitional economies. Shareholder's opportunities to extract private benefits of control turn out to depend not only on the size of equity stake, but also on the relative power of other block holders. The expropriation threat appears to be most severe in the companies where the free float constitutes a substantial fraction of the shares outstanding. Moreover, the analysis reveals that liquidity costs considerably influence the level of block premia in Poland. Finally, the results document a positive role of the state as an institutional investor in listed companies.
Original languageEnglish
Place of PublicationLondon
PublisherCentre for Economic Policy Research (CEPR)
Number of pages34
ISBN (Print)02658003
Publication statusPublished - 2002

Publication series

NameCEPR Discussion Paper
No.3280

Fingerprint

Equity
Poland
Transition economies
Ownership concentration
Transitional economies
Role of the state
Private benefits of control
Costs and benefits
Institutional investors
Float
Threat
Liquidity
Agency theory
Minority shareholders
Shareholders
Valuation effects
Expropriation
Shareholder protection
Listed companies
Costs

Cite this

Trojanowski, G. (2002). Equity Block Transfers in Transition Economies: Evidence from Poland. (CEPR Discussion Paper; No. 3280). London: Centre for Economic Policy Research (CEPR).
Trojanowski, G. / Equity Block Transfers in Transition Economies : Evidence from Poland. London : Centre for Economic Policy Research (CEPR), 2002. 34 p. (CEPR Discussion Paper; 3280).
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Trojanowski, G 2002, Equity Block Transfers in Transition Economies: Evidence from Poland. CEPR Discussion Paper, no. 3280, Centre for Economic Policy Research (CEPR), London.

Equity Block Transfers in Transition Economies : Evidence from Poland. / Trojanowski, G.

London : Centre for Economic Policy Research (CEPR), 2002. 34 p. (CEPR Discussion Paper; No. 3280).

Research output: Book/ReportReportProfessional

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AB - This Paper investigates valuation effects of share block transfers and employs agency theory to explain the determinants of block premia. A sample of transactions from Poland is used to measure benefits and costs of ownership concentration. Block premia are found to be substantially lower than in well-developed markets, in spite of the insufficient minority shareholders' protection in transitional economies. Shareholder's opportunities to extract private benefits of control turn out to depend not only on the size of equity stake, but also on the relative power of other block holders. The expropriation threat appears to be most severe in the companies where the free float constitutes a substantial fraction of the shares outstanding. Moreover, the analysis reveals that liquidity costs considerably influence the level of block premia in Poland. Finally, the results document a positive role of the state as an institutional investor in listed companies.

M3 - Report

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Trojanowski G. Equity Block Transfers in Transition Economies: Evidence from Poland. London: Centre for Economic Policy Research (CEPR), 2002. 34 p. (CEPR Discussion Paper; 3280).