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Model, Methodology and Data

Part of the Contributions to Economics book series (CE)

Keywords

Endogenous Variable Institutional Investor Institutional Ownership Vote Share Large Shareholder 
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References

  1. 1.
    See Demsetz/Lehn [1985], Jacquemin/De Ghellinck [1980], Kamerschen [1968], Kamerschen/Paul [1971], Larner [1966], Leech/Leahy [1991], McEachern [1975], Mehran [1995], Murali/Welch [1989], Pedersen/Thomsen [1999], Radice [1971], Round [1976], Stano [1976], Steer/Cable [1978], and Thonet/Poensgen [1979].Google Scholar
  2. 2.
    See Chen et al. [1993], Cho [1998], Cleary [2000], Cui/Mak [2002], Gugler et al. [2003b], Hermalin/Weisbach [1991], Holderness et al. [1999], Hubbard/Palia [1995], Kole [1996], McConnell/Servaes [1990, 1995], Monsen et al. [1968], Mørck et al. [1988], Short/Keasey [1999], Short et al. [2002a, 1994], Stulz [1988], Welch [2003], and Wruck [1989].Google Scholar
  3. 4.
    See Holderness et al. [1999], Hubbard/Palia [1995], Kole [1996], McConnell/Servaes [1990], Mørck et al. [1988], and Wruck [1989].Google Scholar
  4. 5.
    See Hubbard/Palia [1995], Mørck et al. [1988], Wruck [1989] and Holderness et al. [1999] with their 1935 sample.Google Scholar
  5. 7.
    Chen et al. [1993] and Cho [1998] change the threshold to 7% and 12% or 7% and 38% respectively.Google Scholar
  6. 8.
    See Mathiesen [2002, p. 33] and Kole [1995].Google Scholar
  7. 10.
    Examples for a squared variable are McConnell/Servaes [1990, 1995], and Short et al. [1994]. The third-degree polynomial is applied by Short/Keasey [1999, p. 86].Google Scholar
  8. 11.
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    Mørck et al. [1988] arrived at that turning points as a result of examining a variety of piecewise formulations. Their regression including the turning points of 5% and 25% provided the lowest sum of squared errors. Nevertheless, they note that the choice of 5% is motivated by the fact that this is the mandatory disclosure level of ownership interest (mandated by the SEC for their US sample) and also Herman [1981] presents a share of 5% as a non-negligible stake. The choice of the second turning point is motivated by the suggestion of Weston [1979] that directors’ ownership of 20%–30% prohibits a successful hostile takeover bid.Google Scholar
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  25. 32.
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  28. 35.
    For a detailed comparison of the methods see Greene [1990, pp. 636–638]. See Zellner/Theil [1962] for a detailed explanation of the 3SLS method.Google Scholar
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    See Savvides [1998, p. 816]. It is an iterative method that minimizes a distance function of the form ε′[Σ−1H(H′H)−1H′] where ε is the (stacked) vector of residuals, Σ is a consistent estimate of the residual variance-covariance matrix, and H is the Kronecker product of an identity matrix of the order of the number of the equations and the matrix of instruments. Thus, the criterion for estimation is the sum of squared transformed residuals. For each observation, fitted residuals are formed as the fitted values from regression on instrumental variables. These are transformed by multiplying by the square root of the covariance matrix of the residuals. The contribution of the observation to the criterion is the sum of squared values of the transformed fitted residuals.Google Scholar
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    This limitation is quite common as many studies focus on one stock exchange, for example the New York Stock Exchange [McConnell/Servaes 1990], the Milan Stock Exchange [Zingales 1994] and the Stock Exchange of Singapore Main or Second Board [Mak/Li 2001].Google Scholar
  34. 43.
    14 non-German companies were excluded in 2000 and 44 in 2003 respectively since national legal differences may bias the sample. The influence of a national effect was analyzed in several studies, for instance by Dyck/Zingales [2004], La Porta et al. [1997], and Pedersen/Thomsen [1999].Google Scholar
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  37. 46.
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  39. 49.
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  40. 51.
    Already Thonet/Poensgen [1979] use only the largest shareholder, also do Becht [1999], Becht/Röell [1999], Edwards/Nibler [2000], Edwards/Weichenrieder [2004], and Franks/Mayer [2001].Google Scholar
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    Edwards/ Weichenrieder [2004] also use a dummy variable, whereas Cubbin/Leech [1983] implement the share sizes of other shareholders within their measure.Google Scholar
  43. 56.
    This change was also made by Gugler et al. [2004, p. 18].Google Scholar
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    This practice modifies outliers by making them no more extreme than the most extreme data that is believed to be relevant or accurately measured. This method is for example applied by Demsetz/Villalonga [2001].Google Scholar
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  47. 62.
    Mathiesen [2002] applies a rule cutting values below € 100,000.Google Scholar
  48. 63.
    This relation is empirically supported by Bathala [1996], Bergström/Rydqvist [1990a], Crutchley/Hansen [1989], Demsetz/Lehn [1985], and Pedersen/Thomsen [1999].Google Scholar
  49. 64.
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    If applying the rule by Mathiesen [2002] (95%), no cases are detected.Google Scholar
  58. 74.
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    As far as firms can choose, they prefer internal over equity financing and equity over debt financing. See Myers/Majluf [1984] and Myers [1984].Google Scholar
  67. 83.
    Also included by Aggarwal/Samwick [2003], Amihud et al. [1990], Bathala [1996], Bøhren/Ødegaard [2003], Carney/Gedajlovic [2002], Chan et al. [1990], Cho [1998], Chowdhury/Geringer [2001], Demsetz/Lehn [1985], Farinha [2003], Fee [2002], Gugler et al. [2004], Hill/Snell [1989], Himmelberg et al. [1999], Jarrell/Poulsen [1988], Lang et al. [1991], Mathiesen [2002], McConnell/Muscarella [1985], Shin/Kim [2002], and Zhang [1998].Google Scholar
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    See Carney/Gedajlovic [2002, pp. 129–130] and Pedersen/Thomsen [1998, p. 392]. Similar results of a positive relation for Asian companies were found by Fukuyama [1995], Redding [1990, 1994], and Yoshihara [1988]. However, Hill [1995] and Redding [1994] originate this relation partly from the effect of weak appropriability regimes upon investment decisions.Google Scholar
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    The formula for the costs of equity is Ri = Rf + βi (RMRf), with Ri as the expected return, Rf as risk-free rate of return and the risk premium (RMRf). See Elton/Gruber [1995, p. 298–302]. For further information on the Capital Asset Pricing Model see Elton/Gruber [1995, pp. 294–404].Google Scholar
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    Further studies are Cubbin/Leech [1986], Cui/Mak [2002], Edwards/Weichenrieder [2004], McConnell/Servaes [1995], McEachern [1978], Nickell et al. [1997], Radice [1971], Schulze et al. [2003], Short/Keasey [1999], and Upton et al. [2003].Google Scholar
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  94. 111.
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  98. 115.
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