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Minority Shareholder Protections and the Private Benefits of Control for Swedish Mergers

Published online by Cambridge University Press:  06 April 2009

Martin Holmén  and
John D. Knopf
Martin Holmén
Affiliation:
martin.holmen@nek.uu.se, Uppsala University, SE-751 20, Uppsala, Sweden;
John D. Knopf
Affiliation:
knopfjoh@shu.edu, Stillman School of Business, Seton Hall University, 400 South Orange Avenue, South Orange, NJ 07079–2692.
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Abstract

Sweden has a high degree of separation of ownership from control through pyramids, dual-class shares, and cross-holdings. This increases the potential for private benefits of control. However, Sweden's extralegal institutions—tax compliance and newspaper circulation—are consistent with greater shareholder protection. Using data on Swedish mergers we find limited evidence of shareholder expropriation. Apparently, Sweden's extralegal institutions offset the drawback of weak corporate governance.

Type
Research Article
Information
Journal of Financial and Quantitative Analysis , Volume 39 , Issue 1 , March 2004 , pp. 167 - 191
Copyright
Copyright © School of Business Administration, University of Washington 2004

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