The Influence of Blockholders on Agency Costs and Firm Value (eBook)

Dr. Markus P. Urban completed his doctoral studies under the guidance of Prof. Dr. Annette G. Köhler at the Chair of Accounting and Auditing at the Mercator School of Management, University of Duisburg-Essen.

Foreword 6
Acknowledgements 7
Summary of the Contents 8
Table of Contents 9
List of Tables 14
List of Figures 18
List of Abbreviations 20
List of Symbols 26
1 Introduction 34
1.1 Motivation and Purpose 34
1.2 Structure 41
2 Theoretical Foundation and Institutional Environment 44
2.1 Agency Theory 44
2.1.1 Foundations of Agency Theory 45
2.1.2 Manager-Shareholder Agency Conflict 55
2.1.3 Shareholder-Debtholder Agency Conflict 62
2.1.4 Principal-Principal Agency Conflicts 67
2.1.5 Agency Costs 77
2.1.6 Corporate Governance 80
2.2 Institutional Environment in Germany 88
2.2.1 Financial System 88
2.2.2 Corporate Governance System 94
2.2.3 Rights and Obligations of Shareholders 114
2.2.4 Ownership Structure 118
2.2.5 Relevant Agency Conflicts 121
2.3 Institutional Environment in the European Union 124
2.3.1 EU Propositions on Corporate Governance 124
2.3.2 EU Directive on Alternative Investment Fund Managers 128
2.4 Résumé 131
3 Monitoring by a Blockholder 133
3.1 Traditional Definition of Monitoring 133
3.1.1 General Functioning of Monitoring 133
3.1.2 Monitoring Mechanisms 137
3.1.3 Costs and Benefits of Monitoring 140
3.2 Revised Definition of Monitoring 143
3.2.1 Deficiencies of the Traditional Definition of Monitoring 144
3.2.2 Revised Definition of Monitoring 146
3.3 Empirical Evidence on the Impact of Blockholder Monitoring 148
3.3.1 Impact on Target Firm Performance 149
3.3.2 Impact on Target Firm Characteristics 152
3.3.3 Impact on Executive Compensation and Executive Turnover 155
3.3.4 Implications of the Empirical Evidence 157
3.4 Résumé 158
4 Determinants of Blockholder Monitoring 160
4.1 Blockholder Characteristics 160
4.1.1 Ownership Size 160
4.1.2 Management/Supervisory Board Presence 164
4.1.3 Identity 168
4.2 Blockholder Interrelationships 194
4.2.1 Theory 194
4.2.2 Empirical Evidence 196
4.3 Other Determinants of Blockholder Monitoring 198
4.3.1 Legal Environment 198
4.3.2 Presence of Alternative Governance Mechanisms 202
4.3.3 Firm Characteristics 205
4.4 Résumé 211
5 Theoretical Model, Hypotheses, and Operationalization 212
5.1 Theoretical Model 212
5.1.1 Explanation of the Model 212
5.1.2 Model Assumptions 215
5.2 Hypotheses 217
5.2.1 Reasoning Underlying the Hypotheses Development 217
5.2.2 Hypotheses under the Assumption of Blockholder Homogeneity 219
5.2.3 Hypotheses under the Assumption of Blockholder Heterogeneity 220
5.2.4 Hypotheses under the Assumption of Blockholder Interrelationships 241
5.3 Operationalization 250
5.3.1 Agency Costs and Firm Value 250
5.3.2 Blockholder Identity 256
5.3.3 Ownership Structure 261
5.3.4 Control Variables 266
5.4 Résumé 277
6 Empirical Analysis 278
6.1 Data 278
6.1.1 Sample Selection 278
6.1.2 Sample Construction 281
6.1.3 Data Sources 283
6.2 Descriptive Analysis 284
6.2.1 Summary Statistics 284
6.2.2 Analysis under the Assumption of Blockholder Homogeneity 287
6.2.3 Analysis under the Assumption of Blockholder Heterogeneity 288
6.2.4 Analysis under the Assumption of Blockholder Interrelationships 296
6.3 Regression Analysis 303
6.3.1 Methodological Considerations 303
6.3.2 Analysis under the Assumption of Blockholder Homogeneity 314
6.3.3 Analysis under the Assumption of Blockholder Heterogeneity 327
6.3.4 Analysis under the Assumption of Blockholder Interrelationships 349
6.3.5 Robustness Tests 371
6.4 Limitations of the Study 390
7 Conclusion 394
7.1 Approach 394
7.2 Key Findings and Implications 396
7.3 Opportunities for Future Research 403
Appendix 406
References 449
List of Laws and Other Standards 488
List of Other Sources 491