Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: Do Too Many Cooks Spoil the Goulash?

Upjohn Institute Staff Working Paper No. 03-93

23 Pages Posted: 1 Oct 2003

See all articles by John S. Earle

John S. Earle

George Mason University - Schar School of Policy and Government; IZA Institute of Labor Economics

Csaba Kucsera

Hungarian Academy of Sciences (HAS) - Institute of Sociology; Central European University

Almos Telegdy

Corvinus University of Budapest; Magyar Nemzeti Bank

Multiple version iconThere are 2 versions of this paper

Date Written: July 2003

Abstract

We examine the impact of ownership concentration on firm performance using panel data for firms listed on the Budapest Stock Exchange, where ownership tends to be highly concentrated and frequently involves multiple blocks. Fixed-effects estimates imply that the largest block increases return on assets and operating efficiency strongly and monotonically, but the effects of total blockholdings are much smaller and statistically insignificant. Controlling for the size of the largest block, point estimates of the marginal effects of additional blocks are negative. The results suggest that the marginal costs of concentration may outweigh the benefits when the increased concentration involves "too many cooks."

Keywords: ownership, performance, Budapest, stock, exchange, Earle, Upjohn

JEL Classification: G32, G34

Suggested Citation

Earle, John S. and Kucsera, Csaba and Telegdy, Almos, Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: Do Too Many Cooks Spoil the Goulash? (July 2003). Upjohn Institute Staff Working Paper No. 03-93, Available at SSRN: https://ssrn.com/abstract=425440 or http://dx.doi.org/10.2139/ssrn.425440

John S. Earle (Contact Author)

George Mason University - Schar School of Policy and Government ( email )

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HOME PAGE: http://earle.gmu.edu

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Csaba Kucsera

Hungarian Academy of Sciences (HAS) - Institute of Sociology ( email )

Uri utca 49
Budapest, H-1014
Hungary

Central European University

Nador utca 9
Budapest, H-1051
Hungary

Almos Telegdy

Corvinus University of Budapest ( email )

Hungary

Magyar Nemzeti Bank ( email )

Szabadsag ter 8-9
Budapest, H-1850
Hungary

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