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Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: Do Too Many Cooks Spoil the Goulash?

Author

Listed:
  • John S. Earle

    (W.E. Upjohn Institute for Employment Research and Central European University)

  • Csaba Kucsera

    (University Budapest and Central European University)

  • Almos Telegdy

    (Budapest University of Economic Sciences and Central European University)

Abstract
We examine the impact of ownership concentration on firm performance using panel data for firms listed on the Budapest Stock Exchange, where ownership tends to be highly concentrated and frequently involves multiple blocks. Fixed-effects estimates imply that the l largest block increases return on assets and operating efficiency strongly and monotonically, but the effects of total blockholdings are much smaller and statistically insignificant. Controlling for the size of the largest block, point estimates of the marginal effects of additional blocks are negative. The results suggest that the marginal costs of concentration may outweigh the benefits when the increased concentration involves "too many cooks."

Suggested Citation

  • John S. Earle & Csaba Kucsera & Almos Telegdy, 2003. "Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: Do Too Many Cooks Spoil the Goulash?," Upjohn Working Papers 03-93, W.E. Upjohn Institute for Employment Research.
    • Handle: RePEc:upj:weupjo:03-93
    Note: A revised version of this paper appears in Corporate Governance, 13(2), 1-11, March 2005.
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    References listed on IDEAS

    as
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    More about this item

    Keywords

    Budapest; stock; exchange; ownership; concentration; Earle; Upjohn;
    All these keywords.

    JEL classification:

    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance

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