Working Paper: CEPR ID: DP13706
Authors: Gur Aminadav; Elias Papaioannou
Abstract: We provide an anatomy of corporate control around the world after tracing controlling shareholders for thousands listed firms from 127 countries between 2004 and 2012. The analysis reveals considerable and persistent differences across and within regions, as well as across legal families. Government and family control is pervasive in civil-law countries. Equity blocks in widely-held corporations are commonplace, but less so in common-law countries. These patterns apply to large, medium, and small listed firms. In contrast, the association between income and corporate control is highly heterogeneous; the correlation is strong among big and especially very large firms, but absent for medium and small listed firms. We then examine the association between corporate control and various institutional features. Shareholder rights against insiders' self-dealing activities correlate strongly with corporate control, though legal formalism and creditor rights less so. Corporate control is strongly related to labor market regulations, concerning, among others, the stringency of employment contracts, the power and extent of unions. The large sample correlations, thus, offer support to both legal origin and political-development theories of financial development.
Keywords: corporate control; ownership concentration; law and finance; family firms; government ownership; investor protection; regulation
JEL Codes: G30; K00; N20
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Corporate control is correlated with labor market regulations (J48) | Stringent labor laws tend to coincide with higher levels of corporate control (J88) |
| Presence of shareholder protection rights (G38) | Dispersed ownership (J54) |
| Income (D31) | Corporate control among large firms (G34) |
| Corporate control is correlated with legal origin (G34) | Corporate control is shaped by the institutional environment (G34) |
| Corporate control is correlated with labor market regulations (J48) | Institutional features significantly relate to corporate structure (L22) |
| Controlling shareholders are prevalent in civil law countries (G34) | Corporate control is correlated with legal origin (G34) |