Ownership concentration and investment performance of Austrian listed companies
We apply panel estimation techniques to full population of Austrian corporations from 2007-2020 in order to analyze the impact of ownership concentration on performance. Return on investment (ROI) is lower than cost of capital, which insinuates that managers invest beyond optimal investment level i...
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| Format: | Article |
| Language: | English |
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Associazione Economia civile
2025-01-01
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| Series: | PSL Quarterly Review |
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| Online Access: | https://rosa.uniroma1.it/rosa04/psl_quarterly_review/article/view/18179 |
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| author | Nouman Afgan Muhammad Zubair Mumtaz Robert M. Kunst |
| author_facet | Nouman Afgan Muhammad Zubair Mumtaz Robert M. Kunst |
| author_sort | Nouman Afgan |
| collection | DOAJ |
| description |
We apply panel estimation techniques to full population of Austrian corporations from 2007-2020 in order to analyze the impact of ownership concentration on performance. Return on investment (ROI) is lower than cost of capital, which insinuates that managers invest beyond optimal investment level instead of maximizing shareholders’ wealth. ROI for pyramidal firms is 35% lower than cost of capital implying that managers pursue their objectives. State-owned firms’ ROI is 28% lower than cost of capital showing that discretionary investments lead to sub-optimal performance. An inverted U-curve is estimated with a turning point at 69% voting rights, beyond which entrenchment effect dominates the incentives effect for 37% firms. This evidence confirms minority shareholders’ expropriation, which has repercussions for efficient governance in Austrian corporations.
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| format | Article |
| id | doaj-art-2b266b3ed5cb4df08c889cae1b29040a |
| institution | Kabale University |
| issn | 2037-3635 2037-3643 |
| language | English |
| publishDate | 2025-01-01 |
| publisher | Associazione Economia civile |
| record_format | Article |
| series | PSL Quarterly Review |
| spelling | doaj-art-2b266b3ed5cb4df08c889cae1b29040a2025-02-02T12:06:58ZengAssociazione Economia civilePSL Quarterly Review2037-36352037-36432025-01-017731110.13133/2037-3643/18179Ownership concentration and investment performance of Austrian listed companiesNouman Afgan0Muhammad Zubair Mumtaz1Robert M. Kunst2Hajvery University and Government College University, LahoreUniversity of Bahrain, Sakhir, and National University of Sciences and Technology, Islamabad (Pakistan)Institute of Advanced Studies, Vienna, and University of Vienna, Austria We apply panel estimation techniques to full population of Austrian corporations from 2007-2020 in order to analyze the impact of ownership concentration on performance. Return on investment (ROI) is lower than cost of capital, which insinuates that managers invest beyond optimal investment level instead of maximizing shareholders’ wealth. ROI for pyramidal firms is 35% lower than cost of capital implying that managers pursue their objectives. State-owned firms’ ROI is 28% lower than cost of capital showing that discretionary investments lead to sub-optimal performance. An inverted U-curve is estimated with a turning point at 69% voting rights, beyond which entrenchment effect dominates the incentives effect for 37% firms. This evidence confirms minority shareholders’ expropriation, which has repercussions for efficient governance in Austrian corporations. https://rosa.uniroma1.it/rosa04/psl_quarterly_review/article/view/18179ultimate ownershipmarginal qreturn on investmentincentives effectentrenchment effect |
| spellingShingle | Nouman Afgan Muhammad Zubair Mumtaz Robert M. Kunst Ownership concentration and investment performance of Austrian listed companies PSL Quarterly Review ultimate ownership marginal q return on investment incentives effect entrenchment effect |
| title | Ownership concentration and investment performance of Austrian listed companies |
| title_full | Ownership concentration and investment performance of Austrian listed companies |
| title_fullStr | Ownership concentration and investment performance of Austrian listed companies |
| title_full_unstemmed | Ownership concentration and investment performance of Austrian listed companies |
| title_short | Ownership concentration and investment performance of Austrian listed companies |
| title_sort | ownership concentration and investment performance of austrian listed companies |
| topic | ultimate ownership marginal q return on investment incentives effect entrenchment effect |
| url | https://rosa.uniroma1.it/rosa04/psl_quarterly_review/article/view/18179 |
| work_keys_str_mv | AT noumanafgan ownershipconcentrationandinvestmentperformanceofaustrianlistedcompanies AT muhammadzubairmumtaz ownershipconcentrationandinvestmentperformanceofaustrianlistedcompanies AT robertmkunst ownershipconcentrationandinvestmentperformanceofaustrianlistedcompanies |