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CEP discussion paper
Corporate Ownership Structure and Performance in Europe
Jeremy Grant and Tom Kirchmaier
April 2004
Paper No' CEPDP0631:
Full Paper (pdf)

JEL Classification: G32; G34; G38

Tags: corporate governance; ownership structures; performance; europe

In this paper, we show that ownership structures vary considerably across Europe, and that the dominant form of ownership is not necessarily the most efficient one. These findings are in contradiction to similar research based on US samples. The results also demonstrate that firms without a dominant shareholder tend to outperform their country peer groups. We base our analysis on a new and unique dataset of uniform ownership data of the largest 100 firms in the five major European economies. We quantify the differences in ownership by comparing three distinct ownership structures of firms and relating them to performance. For the first time we employ a Hodrick-Prescott Filter, a methodology widely used in macroeconomics to isolate the trend growth components from cyclical fluctuations, to estimate the share price trend of each firm. We take this trend as a good indirect indicator of the quality of governance.