Does stable ownership create value? Evidence from the global financial crisis

We investigate the value of stable ownership for a sample of European firms using the global financial crisis as an exogenous shock and pre-and post-crisis years as benchmark periods. Consistent with the argument that stable ownership allows managers to focus on the creation of long-term value, we find that stable ownership resulted in higher stock returns and a higher market-to-book ratio during the crisis. This positive effect of stable ownership was not reversed after the crisis. Stable institutional blockholdings were more valuable in countries with weaker investor protection. However, the positive effect does not apply to firms in which a family is the largest blockholder. Finally, we also find that ownership stability was associated with a higher level of investments, illustrating that stable ownership affects real corporate decisions.

     

Financial Reporting Quality in Private Equity Backed Companies: The Impact of Ownership Concentration

We empirically show on a sample of 270 unquoted, private equity backed companies that the shareholder structure of private companies impacts the quality of their publicly available accounting information. More precisely, companies in which private equity (PE) investors have a high equity stake produce lower quality accounting information than companies in which PE investors have a low equity stake, after controlling for factors like company size and age. We explain our findings by arguing that PE investors with low equity stakes have a higher need for high quality accounting information whereas PE investors with high equity stakes have other means to closely monitor their portfolio companies. This paper has benefited form discussions with workshop participants at the Max Planck Institute. We specifically want to thank Lorraine Uhlaner and Mike Wright (guest editors), two anonymous referees as well as ignace De Beelde, Wouter De Maeseneire, Marc Deloof, Miguel Meuleman and Lloyd Steier for helpful suggestions. Part of this research was completed when Christof Beuselinck was an FWO Scholar at Ghent University. Financial support from the Fonds of Wetenschappelijk Onderzoek (Grant G.0012.02) is kindly appreciated. The usual disclaimer applies.     

After Industrial Society: Service Society as Clean Society? Environmental Consequences of Increasing Service Interaction

Whereas industrial society is known to be to a great extent responsible for the degradation of the environment, service society is assumed to be rather ‘clean’. There has, in fact, been a substantial reduction in material metabolism in industrial production in the developed countries. The increasing interaction intensity, however; which is characteristic for a service society, results in massive transport volumes and thus in other negative environmental impacts which to a large degree offset the advances in industrial production.