Corporate Control and Value Destruction

Investigating a panel of Swedish public companies from 1986 to 2003 (4543 firm year observations) this paper investigates the effect of control structure and type of controlling owner on investment efficiency. Sweden is characterized by a high prevalence of voting and cash flow rights separation, as well as controlled ownership structures where families are the most recurrent ultimate owners in control. Previous studies have found that these factors have a negative impact on firm value…


1 Introduction
1.1 Swedish Family Control Structures and Valuation Discounts
1.2 Pecuniary and Non-pecuniary Private Benefits of Control
1.3 Marginal q – Investment Efficiency on the Margin
1.4 Purpose
1.5 Contribution – Methodology and Data Collection
1.6 Delineation and definitions
2 Theory and Empirical Setting
2.1 Theory and Empirical Setting – Summary
3 Hypotheses
3.1 Summary – Hypotheses
4 Methodology
4.1 Marginal q – the Mechanics
5 Data
5.1 Data Collection and Selection
5.2 Descriptives
6 Results
6.1 Statistical Characteristics of the Sample
6.1.1 Choice of estimator
6.1.2 Depreciation of assets – δ
6.2 Regressions
7 Analysis
7.1 Overall Investment Efficiency and Presence of Agency Costs
7.2 Separation between Voting and Cash Flow Rights
7.3 Type of owner
8 Conclusions
9 Further Research
10 References
11 Appendices
11.1 Clarification of Regression Approach
11.2 Data Collection Method
11.3 Variables
11.4 Summary of Relevant Findings
11.4.1 Swedish setting
11.4.2 International Setting
11.5 Mechanisms for Separating Control from Cash Flow Rights Destruction

Author: Malin Ivarsson, Charlotta Lundberg

Source: Stockholm School of Economics

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