Ownership, control and market liquidity

Hamon, Jacques; Ginglinger, Edith

Hamon, Jacques; Ginglinger, Edith (2007-06), Ownership, control and market liquidity, AFFI 2007 (Association Française de Finance), 2007-0612, Paris, France

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Type

Communication / Conférence

Date

2007-06

Conference title

AFFI 2007 (Association Française de Finance)

Conference date

2007-0612

Conference city

Paris

Conference country

France

Metadata

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Author(s)

Hamon, Jacques
Ginglinger, Edith

Abstract (EN)

We examine how ownership concentration and the separation of ownership and control affect market liquidity in France. We find that firms with a large insider blockholder exhibit significantly lower liquidity. Different methods of concentrating control affect liquidity in different ways. Pyramid structures negatively affect liquidity for all pyramiding firms. Double voting right shares, a French specific means of control enhancement rewarding long-term shareholders, lead to increased liquidity for outside investors of small, family- firms, by reducing the probability of informed trading.

Subjects / Keywords

bid-ask spread; liquidity; voting rights; pyramids; ultimate control; ownership

JEL

G14 - Information and Market Efficiency; Event Studies; Insider Trading
G34 - Mergers; Acquisitions; Restructuring; Corporate Governance
G32 - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill