Working Paper Series, Department of Finance, Copenhagen Business School
Steen Thomsen and Caspar Rose
Foundation ownership and financial performance. Do companies need owners?
Abstract: A curious ownership structure is found in Northern Europe
– foundations that own
and operate business companies. The foundations
are non-profit entities, they have no
members and no owners, and they
cannot be dissolved, but regard it as a goal in itself
to run a
business. In many cases these entities control more than 50% of the votes
successful international companies such as Carlsberg and IKEA.
structure completely blocks the market for corporate
control, but it also violates other
basic principles of agency theory
and corporate finance: the personal profit motive
diversification of risk. Nevertheless we present evidence that a sample
of foundation-owned companies listed on the Copenhagen Stock Exchange are
as efficient as other listed companies in terms of risk
adjusted stock returns,
accounting returns and firm value (Tobin’s Q).
These findings have potentially
important implications for the theory
of the firm, in particular they question whether
ownership is a necessary condition for competitive enterprise. They
also invite caution against forcing a harmonization of European corporate
to Anglo-American standards.
Keywords: ownership; Northern Europe; foundations; non-profit entities; corporate control; Denmark; (follow links to similar papers)
JEL-Codes: G10; G18; L30; L31; (follow links to similar papers)
32 pages, April 9, 2002
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