Equity block transfers in transition economies: evidence from Poland
Trojanowski, Grzegorz
Date: 24 May 2008
Publisher
Elsevier
Publisher DOI
Abstract
This paper investigates the valuation effects of share block transfers and employs agency theory to explain the
determinants of equity block premia. A sample of transactions from Poland is used to measure the benefits and costs
of ownership concentration. Block premia are found to be substantially lower than in well-developed markets, ...
This paper investigates the valuation effects of share block transfers and employs agency theory to explain the
determinants of equity block premia. A sample of transactions from Poland is used to measure the benefits and costs
of ownership concentration. Block premia are found to be substantially lower than in well-developed markets, in
spite of the weaker minority shareholders’ protection in transitional economies. Shareholders expect to benefit from
intensified monitoring and from corporate restructuring resulting from block acquisitions (even if such acquisitions
are not followed by a subsequent takeover). Still, shareholders are wary of the expropriation stemming from the
extraction of private benefits of control by block holders. The opportunities to extract such benefits are found to
depend not only on the size of the block holder’s stake, but also on the relative power of other investors. Finally, the
results document a positive role of the State as an investor in listed companies.
Finance and Accounting
Faculty of Environment, Science and Economy
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