Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: do too many cooks spoil the goulash?
Version of Record online: 11 MAR 2005
Corporate Governance: An International Review
Volume 13, Issue 2, pages 254–264, March 2005
How to Cite
Earle, J. S., Kucsera, C. and Telegdy, Á. (2005), Ownership Concentration and Corporate Performance on the Budapest Stock Exchange: do too many cooks spoil the goulash?. Corporate Governance: An International Review, 13: 254–264. doi: 10.1111/j.1467-8683.2005.00420.x
- Issue online: 11 MAR 2005
- Version of Record online: 11 MAR 2005
- Ownership structure;
- corporate governance;
- emerging markets;
We examine the impact of ownership concentration on firm performance using panel data for firms listed on the Budapest Stock Exchange, where ownership tends to be highly concentrated and frequently involves multiple blocks. Fixed-effects estimates imply that the size of the largest block increases profitability and efficiency strongly and monotonically, but the effects of total blockholdings are much smaller and statistically insignificant. Controlling for the size of the largest block, point estimates of the marginal effects of additional blocks are negative. The results suggest that the marginal costs of concentration may outweigh the benefits when the increased concentration involves “too many cooks”.