Ownership dynamics with large shareholders

An empirical analysis

M. Donelli, F. Urzua Infante, B. Larrain

Research output: Contribution to journalArticleScientificpeer-review

Abstract

We study the empirical determinants of corporate ownership dynamics in a market where large shareholders are prevalent. We use a unique, hand-collected 20-year dataset on the ownership structure of Chilean companies. Controllers’ blockholdings are on average high -as in continental Europe, for instance- and quite stable over time. Controllers still make nontrivial changes to their holdings through issuance and block trades. In a typical year controllers’ blockholdings decrease (increase) by 5 percentage points or more in approximately 6% (7%) of firms. Few of these events are associated with changes in the identity of the controller although about half are correlated with changes in the size or composition of the board of directors. We find that the separation between controller’s voting and cash-flow rights reduces the likelihood of ownership dilution. Dilution is preceded by high stock returns, and predicts low stock returns in the future (particularly when done through issuance). Dilution does not seem to be followed by higher investment, debt growth, changes in profitability, or turnover in control.
Original languageEnglish
Pages (from-to)579-609
JournalJournal of Financial and Quantitative Analysis
Volume48
Issue number2
Publication statusPublished - 2013

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Ownership
Controller
Empirical analysis
Large shareholders
Dilution
Stock returns
Turnover
Block trades
Debt
Ownership structure
Profitability
Corporate ownership
Cash flow rights
Board of directors
Voting

Cite this

Donelli, M., Urzua Infante, F., & Larrain, B. (2013). Ownership dynamics with large shareholders: An empirical analysis. Journal of Financial and Quantitative Analysis, 48(2), 579-609.
Donelli, M. ; Urzua Infante, F. ; Larrain, B. / Ownership dynamics with large shareholders : An empirical analysis. In: Journal of Financial and Quantitative Analysis. 2013 ; Vol. 48, No. 2. pp. 579-609.
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Donelli, M, Urzua Infante, F & Larrain, B 2013, 'Ownership dynamics with large shareholders: An empirical analysis', Journal of Financial and Quantitative Analysis, vol. 48, no. 2, pp. 579-609.

Ownership dynamics with large shareholders : An empirical analysis. / Donelli, M.; Urzua Infante, F.; Larrain, B.

In: Journal of Financial and Quantitative Analysis, Vol. 48, No. 2, 2013, p. 579-609.

Research output: Contribution to journalArticleScientificpeer-review

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