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Equity Ownership and Performance An Empirical Study of German Traded Companies

:	Kerstin Groß
:	Equity Ownership and Performance An Empirical Study of German Traded Companies
:	Physica-Verlag
:	9783790819342
:	1
:	CHF 85.30
:

:	Volkswirtschaft
:	English

:	373
:	Wasserzeichen/DRM
:	PC/MAC/eReader/Tablet
:	PDF

The empirical studies presented in this book model the endogeneity by applying the simultaneous equations methodology on the relation of ownership and financial performance as well as on different ownership dimensions themselves. Its final model comprises a four equations system containing performance, general ownership concentration, managerial and institutional ownership.

2 Basic Aspects of Ownership Structure and Performance (p. 9-10)

2.1 Introduction

To introduce the subject, the following chapter starts by taking a closer look on the concept and the di.erent aspects of ownership structure. This is implemented by an elaboration on the di.erent measures and their development in literature. The section will make clear that ownership is not summarizable in one single or a few variables, but that it constitutes rather a large spectrum of measures due to its di.erent aspects and dimensions. Therefore, ownership variables can always mirror only a part of the real ownership structure, which makes the variable selection an important issue in the ownership and performance literature.

Next Section 2.3 states some statistics on the ownership structure of di.erent countries and compares them to the characteristics of the German market. This will verify the advantageousness of German corporations as research objects. Finally, the literature also uses varying forms of performance measures. They can be distinguished by the applied data type, market-based, accountingbased and hybrid measures. Each type raises di.erent problems. The measures of .nancial performance and their appropriateness in the ownership literature are discussed in the Section 2.4.

2.2 Ownership Structure and its Measures

The following section introduces the reader to the concept of ownership structure. This is done by an elaboration on the di.erent aspects of ownership structure and the resulting measures. The discussion of the various forms of measures and the way they are mirroring the ownership structure is of further importance for the later variable selection.

After assessing some general issues of ownership information, di.erent forms of ownership measures are explained. They are examined by their classi .cation into non-metric and metric measures. Finally, some concluding remarks summarize the topic.

2.2.1 General Aspects of Ownership Structure and its Measures

Ownership structure is a multidimensional construct which therefore cannot be mirrored by a single variable. Two major dimensions structuring ownership information are ownership concentration and owner type.

The ownership concentration renders quantitative information on ownership, representing a share size or the sum of shares or a concentration index, e.g., Her.ndahl coe.cient. The second dimension, the owner’s identity, is the qualitative information about the type of shareholder. This information is important since di.erent owner types have di.erent incentives, utility functions and means of control.2 Widely researched identities are management insiders, with the subgroups of o.cers and directors, and institutional investors. These also constitute the main focus of this work. Further identities like families, company founders, strategic investors and governmental organizations have also gained importance, but are not considered in the course of the dissertation.

	Foreword	9
	Preface	10
	Contents	12
	1 Introduction	15
	1.1 Motivation	15
	1.2 Objectives	17
	1.3 Outline	19
	2 Basic Aspects of Ownership Structure and Performance	23
	2.1 Introduction	23
	2.2 Ownership Structure and its Measures	23
	2.2.1 General Aspects of Ownership Structure and its Measures	24
	2.2.2 Non-metric Measures	27
	2.2.3 Metric Measures	31
	2.2.4 Summary	33
	2.3 Ownership Characteristics in Germany and Around the World	33
	2.4 Forms of Financial Performance Measures	37
	2.4.1 Introduction	37
	2.4.2 Market-based Performance Measures	37
	2.4.3 Accounting-based Performance Measures	40
	2.4.4 Hybrid Performance Measures	42
	2.4.5 Summary	47
	3 Theoretical Background and Hypotheses	49
	3.1 General Remarks	49
	3.2 Theoretical Background	50
	3.3 Ownership Concentration and Performance	55
	3.3.1 E.ect of Ownership Concentration on Performance	55
	?,	57
	3.3.2 E.ect of Performance on Ownership Concentration	59
	3.3.3 Summary of Hypotheses on Ownership Concentration	61
	3.4 Insider Ownership and Performance	62
	3.4.1 E.ect of Insider Ownership on Performance	62
	3.4.2 E.ect of Performance on Insider Ownership	67
	3.4.3 Summary of Hypotheses on Insider Ownership	69
	3.5 Institutional Ownership and Performance	70
	3.5.1 E.ect of Institutional Ownership on Performance	71
	3.5.2 E.ect of Performance on Institutional Ownership	75
	3.5.3 Summary of Hypotheses on Institutional Ownership	76
	3.6 Ownership Concentration, Insider and Institutional Ownership	77
	3.6.1 General Discussion	77
	3.6.2 E.ect of Ownership Concentration on Insider Ownership	78
	3.6.3 E.ect of Institutional Ownership on Insider Ownership	79
	3.6.4 Summary of Hypotheses of Ownership Concentration, Institutional Ownership and Insider Ownership	80
	3.7 Summary of Hypotheses	81
	4 Model, Methodology and Data	83
	4.1 Introduction	83
	4.2 Model Speci.cations	83
	4.2.1 Linearity and Monotonousness	83
	4.2.2 Timing of E.ects	88
	4.2.3 Endogeneity, Simultaneousness and Causation	89
	4.2.4 Summary	92
	4.3 Methodology	92
	4.3.1 General Aspects of Simultaneous Equations Systems	92
	4.3.2 Estimation of Simultaneous Equations Systems	95
	4.3.3 E.ect Decomposition after Simultaneous Equations Estimation	97
	4.4 Sample Selection and Variables Used	99
	4.4.1 Sample Selection Data Needs and Data Sources	99
	Sample Restrictions	100
	4.4.2 Ownership Variables	103
	4.4.3 Financial Performance Variables	105
	4.4.4 Further Control Variables	107
	Firm Size	107
	Financial Leverage	109
	Investment Activities	111
	Liquidity	112
	Ease of Monitoring	113
	Risk	113
	Growth	114
	Diversi.cation	115
	Other Control Variables	116
	Summary of Hypothesized E.ects	116
	4.4.5 Descriptives Statistics	117
	5 Empirical Analyses	123
	5.1 Analysis Procedure	123
	5.2 General Ownership Concentration	125
	5.2.1 Endogeneity Tests	125
	5.2.2 Model Speci.cation	127
	5.2.3 Results E . ect of Ownership Concentration	130
	E.ect of Tobin’s Q	136
	E.ect of Control Variables on Tobin’s Q	140
	E.ect of Control Variables on Ownership Concentration	142
	5.2.4 Robustness Checks	143
	5.2.5 Summary	147
	5.3 Insider Ownership	148
	5.3.1 Endogeneity Tests	148
	5.3.2 Model Speci.cation	149
	5.3.3 Results E . ect of Endogenous Variables	151
	E.ect of Control Variables	151
	5.3.4 Robustness Concerning the Insider De.nition	153
	5.3.5 Further Robustness Checks	160
	5.3.6 Summary	162
	5.4 Institutional Ownership<