Ownership structure, investment, and the corporate value: An empirical analysis

Ownership structure, investment, and the corporate value: An empirical analysis This paper examines the relation among ownership structure, investment, and corporate value, focusing on whether ownership structure affects investment. Ordinary least squares regression results suggest that ownership structure affects investment and, therefore, corporate value. However, simultaneous regression results indicate that the endogeneity of ownership may affect these inferences, suggesting that investment affects corporate value which, in turn, affects ownership structure. The evidence shows that corporate value affects ownership structure, but not vice versa. These findings raise questions regarding the assumption that ownership structure is exogenously determined, and bring into question the results in studies that treat ownership structure as exogenous. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of Financial Economics Elsevier

Ownership structure, investment, and the corporate value: An empirical analysis

Journal of Financial Economics, Volume 47 (1) – Jan 1, 1998

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Publisher
Elsevier
Copyright
Copyright © 1998 Elsevier Science S.A. All rights reserved
ISSN
0304-405x
D.O.I.
10.1016/S0304-405X(97)00039-1
Publisher site
See Article on Publisher Site

Abstract

This paper examines the relation among ownership structure, investment, and corporate value, focusing on whether ownership structure affects investment. Ordinary least squares regression results suggest that ownership structure affects investment and, therefore, corporate value. However, simultaneous regression results indicate that the endogeneity of ownership may affect these inferences, suggesting that investment affects corporate value which, in turn, affects ownership structure. The evidence shows that corporate value affects ownership structure, but not vice versa. These findings raise questions regarding the assumption that ownership structure is exogenously determined, and bring into question the results in studies that treat ownership structure as exogenous.

Journal

Journal of Financial EconomicsElsevier

Published: Jan 1, 1998

References

  • Equity ownership and the two faces of debt
    McConnell, J.; Servaes, H.

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