Corporate Ownership Structures: Private versus Social Optimality / Lucian Arye Bebchuk, Luigi Zingales.

Format:

Book

Author/Creator:

Bebchuk, Lucian Arye.

Contributor:

National Bureau of Economic Research.

Zingales, Luigi.

Series:

Working Paper Series (National Bureau of Economic Research) no. w5584.

NBER working paper series no. w5584

Language:

English

Subjects (All):

Going public (Securities).

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Corporate Ownership Structures

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 1996.

Cambridge, Mass. : National Bureau of Economic Research, 1996.

Summary:

This paper analyzes the inefficiencies that might arise in the ownership structure chosen at the initial public offering stage. We show that, contrary to what is commonly believed, the desire of initial owners to maximize their proceeds leads them to choices that, although privately optimal, may be socially inefficient. This distortion tends to be in the direction of excessive incidence of controlling shareholder structures and excessive divestment of cash flow rights. Our analysis has far-reaching policy implications for dual class stock, stock pyramiding, sale of control rules, and public offerings of minority shares. Among its positive implications, our analysis suggests reasons for the substantial differences in the incidence of control blocks across different countries.

Notes:

Print version record

May 1996.