2. Structure of Presentation: Introduction Data ,Definition & Example Analysis Conclusion Reference Papers: Berleand Means(1932) – The modern Corporation and Private property Jensen and Meckling (1976) – Theory of firm: Managerial Behavior, Agency cost and ownership structure Fama and Jensen (1976) – Separation of ownership and control
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4. Minority shareholder protectionLegal protection Control rights This paper mainly deals with control rights and minority protection, but the image is different from the Berle & Means .
5. Why control rights and dilution of ownership shares? 1920 to 1924 1940 1980
6. END of Introduction Main points are analyzed here: Widely held or ownership with significant voting right? Who are the significant owner? How the control? What are the dependent variables of Ownership pattern ?
7. Data Types 27 richest economies (based on 1993 end per capita income) were selected. For each country, 2 samples of firms were collected – Sample I: Top 20 firms (ranked by market capitalizations at the end of 1995) – Coined as “Large Firms”. Sample II: 10 small firms (minimum market capitalization more than $500 million) – Coined as “Medium Firms”.
10. Wholly private or wholly government ownedTwo describe control of companies, shareholders who control more than 10% of votes are considered (significant threshold and most countries mandate).
11. Variables & data collection Databases The following databases and information sources were used – WorldScope Annual reports 20-F filings Proxy statements Country specific books Internet Websites
14. Firms are divided into 2 categories – widely held and ultimate owners.
15. There exists 2 separate chains of voting rights – 10% and 20%
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17. Variables & data collection Control Patterns Superior Voting Rights Cross Shareholding Pattern Pyramid Structures
18. Example I – microsoft corp. Microsoft Corporation Bill Gates 23.7% (Chairman & CEO) Paul Allen 9% (Co-Founder) Steven Ballmer 5% (EVP)
19. Example II – Barrick gold Barrick Gold (Chm. & CEO: P. Munk) Horsham Corp. 16.3% C&V (Chm. & CEO: P. Munk) Peter Munk 7.3% C 79.7% V Southeastern Asset Management 18.2% C 4.0% V
20. Example III – Hutchison whampoa Hutchison Whampoa (Chm: Li ka-Shing) (Vice Chm: Richard Li) Cheung Kong Holdings 43.9% (Chm & Founder: Li Ka-Shing) Family Li (Ka-Shing; Richard; Victor) 35%
21. Example Iv – toyota motors corp. Toyota Motors Corp. Mitsui Group 12.1% Sanwa Group 8.7% Tokai Group 5% Toyota Group 4.8% Daiwa Group 2.4% Un- Affiliated 3.1% Sakura Bank – 5.0% (2.4% CS) Mitsui Fire & Marine – 2.5% (2.1% CS) Mitsui T&B – 2.4% (1.8%) Mitsui M. Life – 2.2%
22. Example v – toyota motors corp. Daimler-Benz AG Deutsche Bank 24.4 & C%V Stella 12.3% C&V Keuait Govt. 12.9% C&V Dresdner Bank 12.5% C&V Commerz Bank 12.5% C&V Sudwest Star 12.5& C&V Allianz 12.5& C&V State Bank 12.5& C&V Star 12.5& C&V Voith Family 12.5& C&V Bosch Family 12.5& C&V Wurtt. VersiCherung 25% C&V Deutsche Effecte Wechseln 25% C&V Sudwest Lendesbank 25 % C&V R+V Holdings 25% C&V Baden-Wurtt. VersiCherung 25% C&V Wust-enrot Bank 25% C&V Vereinte Kranken Vers 25% C&V R+V Holdings 25% C&V Swiss Re & State Voith Family 94% C State State >90% C Ban Geun Car 25% C Wust-enrot 25% C State Banks >90% C&V
33. 23% widely held and 45% family held. 13% ( 38%) for medium sized. 38/45 family but 30/38 Family owned 53% but widely owned 11%. 11/53 for large firm 24/35. B&M is correct for large firms in protected countries.
34. Voting rights separated from cash flow right : multiple class, cross share holding and pyramids. Sweden has much more deviation but other few countries have less deviation. So multiple class of shares are not central mechanism. 26% = pyramid, 31/18. Average family control 1.33 but management participation 69%/,75/69. others often don’t control.
