Ownership, Managerial Control and the Governance of Companies Listed on the Brussels Stock Exchange

Research output: Working paperDiscussion paperOther research output

350 Downloads (Pure)

Abstract

This paper examines how corporate control is exerted in companies listed on the Brussels Stock Exchange. There are several alternative corporate governance mechanisms which may play a role in disciplining poorly performing management: blockholders (holding companies, industrial companies, families and institutions), the market for partial control, debt policy, and board composition. Even if there is redundancy of substitute forms of discipline, some mechanisms may dominate. We find that top managerial turnover is strongly related to poor performance measured by stock returns, accounting earnings in relation to industry peers and dividend cuts and omissions. Tobit models reveal that there is little relation between ownership and managerial replacement, although industrial companies resort to disciplinary actions when performance is poor. When industrial companies increase their share stake or acquire a new stake in a poorly performing company, there is evidence of an increase in executive board turnover, which suggest a partial market for control. There is little relation between changes in ownership concentration held by institutions and holding companies, and disciplining. Still, high leverage and decreasing solvency and liquidity variables are also followed by increased disciplining, as are a high proportion of nonexecutive directors and the separation of the functions of CEO and chairman.
Original languageEnglish
Place of PublicationTilburg
PublisherFinance
Number of pages31
Volume1999-63
Publication statusPublished - 1999

Publication series

NameCentER Discussion Paper
Volume1999-63

Fingerprint

Ownership
Governance
Stock exchange
Managerial control
Listed companies
Managerial turnover
Blockholders
Corporate governance mechanisms
Ownership concentration
Industry
Accounting earnings
Resorts
Turnover
Chief executive officer
Family companies
Debt policy
Substitute
Chairmen
Peers
Liquidity

Keywords

  • Corporate finance
  • corporate control
  • ownership structures
  • government regulation

Cite this

@techreport{0e7a2422e78448a98016d423d8752ba7,
title = "Ownership, Managerial Control and the Governance of Companies Listed on the Brussels Stock Exchange",
abstract = "This paper examines how corporate control is exerted in companies listed on the Brussels Stock Exchange. There are several alternative corporate governance mechanisms which may play a role in disciplining poorly performing management: blockholders (holding companies, industrial companies, families and institutions), the market for partial control, debt policy, and board composition. Even if there is redundancy of substitute forms of discipline, some mechanisms may dominate. We find that top managerial turnover is strongly related to poor performance measured by stock returns, accounting earnings in relation to industry peers and dividend cuts and omissions. Tobit models reveal that there is little relation between ownership and managerial replacement, although industrial companies resort to disciplinary actions when performance is poor. When industrial companies increase their share stake or acquire a new stake in a poorly performing company, there is evidence of an increase in executive board turnover, which suggest a partial market for control. There is little relation between changes in ownership concentration held by institutions and holding companies, and disciplining. Still, high leverage and decreasing solvency and liquidity variables are also followed by increased disciplining, as are a high proportion of nonexecutive directors and the separation of the functions of CEO and chairman.",
keywords = "Corporate finance, corporate control, ownership structures, government regulation",
author = "L.D.R. Renneboog",
note = "Pagination: 31",
year = "1999",
language = "English",
volume = "1999-63",
series = "CentER Discussion Paper",
publisher = "Finance",
type = "WorkingPaper",
institution = "Finance",

}

Ownership, Managerial Control and the Governance of Companies Listed on the Brussels Stock Exchange. / Renneboog, L.D.R.

Tilburg : Finance, 1999. (CentER Discussion Paper; Vol. 1999-63).

Research output: Working paperDiscussion paperOther research output

TY - UNPB

T1 - Ownership, Managerial Control and the Governance of Companies Listed on the Brussels Stock Exchange

AU - Renneboog, L.D.R.

N1 - Pagination: 31

PY - 1999

Y1 - 1999

N2 - This paper examines how corporate control is exerted in companies listed on the Brussels Stock Exchange. There are several alternative corporate governance mechanisms which may play a role in disciplining poorly performing management: blockholders (holding companies, industrial companies, families and institutions), the market for partial control, debt policy, and board composition. Even if there is redundancy of substitute forms of discipline, some mechanisms may dominate. We find that top managerial turnover is strongly related to poor performance measured by stock returns, accounting earnings in relation to industry peers and dividend cuts and omissions. Tobit models reveal that there is little relation between ownership and managerial replacement, although industrial companies resort to disciplinary actions when performance is poor. When industrial companies increase their share stake or acquire a new stake in a poorly performing company, there is evidence of an increase in executive board turnover, which suggest a partial market for control. There is little relation between changes in ownership concentration held by institutions and holding companies, and disciplining. Still, high leverage and decreasing solvency and liquidity variables are also followed by increased disciplining, as are a high proportion of nonexecutive directors and the separation of the functions of CEO and chairman.

AB - This paper examines how corporate control is exerted in companies listed on the Brussels Stock Exchange. There are several alternative corporate governance mechanisms which may play a role in disciplining poorly performing management: blockholders (holding companies, industrial companies, families and institutions), the market for partial control, debt policy, and board composition. Even if there is redundancy of substitute forms of discipline, some mechanisms may dominate. We find that top managerial turnover is strongly related to poor performance measured by stock returns, accounting earnings in relation to industry peers and dividend cuts and omissions. Tobit models reveal that there is little relation between ownership and managerial replacement, although industrial companies resort to disciplinary actions when performance is poor. When industrial companies increase their share stake or acquire a new stake in a poorly performing company, there is evidence of an increase in executive board turnover, which suggest a partial market for control. There is little relation between changes in ownership concentration held by institutions and holding companies, and disciplining. Still, high leverage and decreasing solvency and liquidity variables are also followed by increased disciplining, as are a high proportion of nonexecutive directors and the separation of the functions of CEO and chairman.

KW - Corporate finance

KW - corporate control

KW - ownership structures

KW - government regulation

M3 - Discussion paper

VL - 1999-63

T3 - CentER Discussion Paper

BT - Ownership, Managerial Control and the Governance of Companies Listed on the Brussels Stock Exchange

PB - Finance

CY - Tilburg

ER -