Ownership Concentration, 'Private Benefits of Control' and Debt FinancingIgor Filatotchev () and
Tomasz Mickiewicz
No 4, UCL SSEES Economics and Business working paper series from UCL School of Slavonic and East European Studies (SSEES) Abstract: Building on the 'law and economics' literature, this paper analyses corporate governance implications of debt financing in an environment where a dominant owner is able to extract ex ante 'private benefits of control'. Ownership concentration may result in lower efficiency, measured as a ratio of a firm's debt to investment, and this effect depends on the identity of the largest shareholder. Moreover, entrenched dominant shareholder(s) may be colluding with fixed-claim holders in extracting 'control premium'. One of possible outcomes is a 'crowding out' of entrepreneurial firms from the debt market, and this is supported by evidence from the transition economies. Keywords: ownership; benefits of control; debt (search for similar items in EconPapers) Published in T. Mickiewicz (ed.), 2006, "Corporate Governance and Finance in Poland and Russia", Palgrave Macmillan, Chapter 8, pp. 159-176. Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:see:wpaper:4 Access Statistics for this paper More papers in UCL SSEES Economics and Business working paper series from UCL School of Slavonic and East European Studies (SSEES) Contact information at EDIRC. |
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