Category: The Need for Minority Shareholder Protection
Equity market reaction to events surrounding reforms in the minority shareholder protection
My 2012 thesis investigated the equity market reaction to events surrounding reforms in the quality and levels of minority shareholder protection, in particular country jurisdictions. The analysis was carried out using one minority shareholder legal protection reform that was enacted in Saudi Arabia and two reforms enacted in Tunisia from late 2007 until early 2009. ...
Empirical results of the relation between the minority shareholders protection and equity markets
My thesis examined empirically whether higher levels of legal protection for minority shareholders are associated with equity markets which were larger, more active, and faster in issuing new securities, that is to say equity market development. Using a sample of 16 MENA countries over the period between 2005-2009, panel data analyses as well as the ...
Corporate Governance
Corporate governance tackles the detachment between ownership and domination and has been a topic of special interest in academic research for a long time. Corporate governance has moved to the forefront in all sectors of the public domain due to its apparent importance in the economic health of corporations in particular and the broader society ...
Self-Dealing
As defined by the Legal Dictionary, self-dealing is: the conduct of a trustee, an attorney, or other fiduciary that consists of taking advantage of his or her position in a transaction and acting for his or her own interests rather than for the interests of the beneficiaries of the trust or the interests of his ...
Evidences of Minority Shareholders Expropriation
Minority shareholders are defined as outside or non-controlling shareholders because their holdings are small in absolute terms and relative to the corporation’s total outstanding shares. With only a small portion of the corporation’s outstanding shares, these investors have limited voting rights and accordingly have little power of control within the corporation. Sometimes their investment is ...
Measuring the Private Benefits of Control
There are a number of studies which focus on estimating the PBC as a tool to assess its impact on financial development. PBC are hard to measure because the values of most of them are personal and not verifiable in a direct way (Dyck and Zingales, 2004). Thus, it is difficult to observe these benefits ...
Agency Problem
For several decades, the separation issue between ownership and control has been reflected in agency theory, where providers of services are regarded as agents of the people on whose behalf the service is performed (Jensen and Meckling, 1976; Stulz, 1988). According to Jensen and Meckling, the relation between the financiers and managers – the agency ...
Private Benefit of Control (PBC)
The existing literature often identifies private benefits of control (PBC) as “the ‘psychic’ value some shareholders attribute simply to being in control”, as well as the “perquisites enjoyed by top executives and/ or majority shareholders” (Harris and Raviv, 1988; Aghion and Bolton, 1992; Dyck and Zingales, 2004, p. 540). This includes anything that is not ...
Controlling Shareholders
The second half of twentieth century witnessed a trend of increasing larger groups of shareholders as the favoured mechanism to counter the managerial agency problem (Bhagat et al., 2004). These large shareholders might be controlling blockholders or institutional investors who invest on behalf of others. Their stake in the corporation might be only a minority ...
Separation of ownership and control
Shareholders have a very special (and difficult) position among financiers. They provide funds to the firm in return for nothing but the promise of an uncertain future return. The realisation of this profit, however, is not delegated to them directly, or at least not to all of them, but rather, it is entrusted to the ...