Resource title

The Causal Relationship Between Insider Ownership, Owner Identity, and Market Valuation Among the Largest European Companies

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Resource description

Også som working paper 2001-15 ; The causal relationship between insider ownership and market valuation is tested bysimultaneous estimation of the causes and effect of insider ownership among the largestcontinental European companies. Controlling for nation and industry effects insiderownership (measured by the fraction of "closely held" shares) is found to have a positiveeffect on market valuation (market-to-book values). And market valuation is found to have apositive feedback effect on the level of insider ownership. The findings provide empiricalsupport for a theoretical model proposed by La Porta et al (1999). But the results are alsofound to be sensitive to owner identity: while a higher level of financial and corporate insiderownership is found to increase market valuation, family ownership has no significant effect,and a higher level of government ownership is found to reduce market valuation.

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Torben Pedersen, Steen Thomsen

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eng

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application/pdf

Resource resource URL

http://hdl.handle.net/10398/6535

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