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Equity Ownership and Firm Value in Emerging Markets

Karl V. Lins
The Journal of Financial and Quantitative Analysis
Vol. 38, No. 1 (Mar., 2003), pp. 159-184
DOI: 10.2307/4126768
Stable URL: http://www.jstor.org/stable/4126768
Page Count: 26
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Since scans are not currently available to screen readers, please contact JSTOR User Support for access. We'll provide a PDF copy for your screen reader.
Equity Ownership and Firm Value in Emerging Markets
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Abstract

This paper investigates whether management stock ownership and large non-management blockholder share ownership are related to firm value across a sample of 1433 firms from 18 emerging markets. When a management group's control rights exceed its cash flow rights, I find that firm values are lower. I also find that large non-management control rights blockholdings are positively related to firm value. Both of these effects are significantly more pronounced in countries with low shareholder protection. One interpretation of these results is that external shareholder protection mechanisms play a role in restraining managerial agency costs and that large non-management blockholders can act as a partial substitute for missing institutional governance mechanisms.

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