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Good matches last longer: unobserved heterogeneity across firm-owner matches

  • The majority of studies on the value impact of ownership concentration consider firm heterogeneity as a potential source of endogeneity. This paper suggests control concentration to be additionally correlated with unobserved firm-owner match characteristics that affect firm valuation. Using a sample of CDAX firms from 2000-2009, we find favorable – value enhancing – firm-owner matches to be more likely to emerge at high ownership concentration and with long tenure of the controlling owner. This finding supports the hypothesis of patient and committed large blockholders. We conclude that neglecting match heterogeneity masks the positive average effect of ownership concentration in Germany.

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Document Type:Working Paper
Author:Markus Brendel
Chairs and Professorships:Chair of Financial Management
Year of Completion:2014
Working paper. Leipzig: HHL Leipzig Graduate School of Management, 2014