The Transfer of Control in British and German IPOs

This paper analyses the evolution of ownership and control in German and UK IPOs. In a first stage we try to explain why the pre-IPO shareholders of some firms sell out whereas those of other firms do not. German IPOs are matched by size with UK IPOs to obtain a first sample and matched by industry to obtain a second sample. Ownership and control for both matched samples evolves in a different way. An empirical model based on recent theories of ownership is specified, which explains differences in ownership within and across the two countries. The main explanatory factors are different levels of risk, liquidity constraints of the initial shareholders and different levels of pre-IPO ownership concentration. In a second stage we examine whether the targets of takeovers have different characteristics than firms that become widely held. We do not find any major differences.IPOs, corporate governance, corporate ownership

Strong Managers and Passive Institutional Investors in the UK

The first striking feature is that ownership of the average UK company is diffuse: a coalition of at least eight shareholders is required to reach an absolute majority of voting rights. Even though the average firm has a dispersed ownership, the reader should bear in mind that there are about ten per cent of firms where the founder or his heirs are holding more than 30 per cent. The ownership structure is also shaped by regulation; the mandatory takeover threshold of 30%, for example, has an important impact on the ownership structure. In about 4% of sample companies, corporate shareholders hold just under 30 per cent of the shares. Second, institutional investors are the most important category of shareholders. However, they tend to follow passive strategies and often do not exercise the votes attached to their shares. Third, the passive stance adopted by institutions increases the already significant power of directors, who are the second most important category of shareholders. Franks, Mayer and Renneboog (1998) show that when directors own substantial shareholdings, they use their voting power to entrench their positions and they can impede monitoring actions taken by other shareholders to restructure the board, even in the wake of poor corporate performance. Fourth, there is an important market for share stakes and share stakes do not tend to be dispersed. Fifth, some of the characteristics of the British system of corporate governance, such as the proxy voting and the one-tier board structure, further strengthen the discretionary power of directors. Therefore, the main agency conflict emerging from the diffuse ownership structure is the potential expropriation of shareholders by the management.Corporate governance, Capital and Ownership structure

Dividend policy, corporate control and tax clienteles : the case of Germany

This paper studies the impact of the concentration of control, the type of controlling shareholder and the dividend tax preference of the controlling shareholder on dividend policy for a panel of 220 German firms over 1984-2005. While the concentration of control does not have an effect on the dividend payout, there is strong evidence that the type of controlling shareholder matters as family controlled firms have high dividend payouts whereas bank controlled firms have low dividend payouts. However, there is no evidence that the dividend preference of the large shareholder has an impact on the dividend decision. JEL Classification: G32, G35 Keywords: Dividend Policy, Payout Policy, Lintner Dividend Model, Tax Clientele Effects, Corporate Governanc

Does Dividend Policy Have a Political Dimension? The British Case

Dividende, Corporate Governance, Großbritannien, Dividend, United Kingdom

Corporate stakeholders and trust

To our knowledge, this is the first paper that investigates the links between trust, the institutional setting (in terms of employment protection legislation (EPL) and investor rights) and studies the impact of all three on economic performance. In line with the previous literature (e.g. Knack and Keefer (1997), Zak and Knack (2001)), we find that trust has a positive impact on GDP per capita growth. Our novel results are twofold. First, we find that EPL and investor rights have a negative relationship and that both (although the latter to a lesser extent) are substitutes for trust. Second, all three variables have a positive effect on economic growth

Looking Forward, Looking Back:British Journal of Management 2000–2015

This paper reflects on 16 years of the British Journal of Management (BJM) and discusses what the future holds. The paper analyses publication statistics and submission figures, as well as Special Interest Group (SIG) affiliation of submissions over the more recent period of 2007–2015. It is found that human resource management has a clear dominance among the SIGs. Other fields that are well represented include strategy, work psychology, corporate governance and performance management. The paper also highlights that submissions to BJM are predominantly made by UK-based authors, possibly reflecting the concentration of UK-based academics among the pool of associate editors and the editorial board members

Corporate Governance in the Financial Sector of Pakistan

La Porta et al. (1998) assign Pakistan, a common-law country, the maximum score of 5 for their anti-director rights index. Pakistan should therefore be a country with good investor protection attracting large amounts of investments. However, the reality could not be more different. Pakistan has been lagging behind other, comparable Asian economies in terms of incoming foreign direct investment as well as GDP-per-capita growth. This paper focuses on the Pakistani banking sector. The paper analyses the banks ownership and control structure. It finds that Pakistan has its own idiosyncrasies, which are difficult to associate with La Porta et al.s characterisation of corporate governance and investor protection in common-law countries. The paper also reviews the recent reforms of corporate governance.Corporate governance, corporate control, Banks, Pakistan, Emerging Markets, investor protection

Foreign business activities, foreignness of the VC syndicate, and IPO value

This article examines the role played by foreign venture capital (VC) firms in U.S. initial public offerings (IPOs). We find that U.S. VC–backed IPOs benefit from the foreignness of the VC syndicate. Specifically, jointly with domestic VC firms, foreign VC firms certify the quality of their portfolio companies at the time of the IPO, which increases their IPO premium. Foreign VC firms also play an advisory role, enhancing the foreign business activities of their U.S. investees, thereby increasing the IPO premium. Finally, value added by foreign VC firms is greater through their monitoring role if they originate from countries where the investee has foreign business activities

How far that little candle throws his beams! An interview with Mats Isaksson

This article adopts a policy-maker perspective on corporate governance, while exploring the role of academia in influencing corporate governance principles, the reasons for the boilerplate approach to governance rules typically adopted by most companies, and the reasons for a possible disconnect between research and corporate governance policies. The article ends with some key lessons about corporate governance and the future research agenda

The market for non-executive directors: Does acquisition performance influence future board seats?

This paper investigates whether non-executive directors associated with good (bad) board decisions are subsequently rewarded (penalized) in the market for directors. This question is addressed by assessing whether the post-acquisition performance of acquiring companies influences the number of non-executive directorships that non-executives involved in these acquisitions hold subsequent to the acquisition. We find that non-executives on the boards of acquirers that increase (omit or cut) their dividend subsequently hold more (fewer) non-executive directorships in listed companies. Our findings suggest that the non-executive labor market is efficient and rewards (penalizes) non-executives for good (bad) acquisitions