Yoser Gadhoum

On the Determinants of Pyramidal Ownership: Evidence on Dilution of Minority Interests

We investigate the determinants, costs and benefits of corporate affiliation to pyramidal holdings. We find that there is a mismatch between cash flow rights and voting rights in firms affiliated to pyramidal holdings, and that corporate policies reflect cash distribution preferences of the ultimate owners. We also find a permanent depressive effect of pyramidal ownership on corporate value. This finding is consistent with the hypothesis that the layers of equity holdings within the pyramidal holding contribute to form an impervious veil behind which ultimate owners engage in expropriating behavior. Our investigation of affiliated firms suggests that ultimate owners, mostly families, are adept at combining their cash flow rights, voting power, and distance from affiliates in a way that minimizes sensitivity to negative events and maximizes sensitivity to positive events.

Potential effects of managers' entrenchment and shareholdings on competitiveness

Abstract Previous studies on competitiveness have examined either broad macroeconomic factors such as financial/economic systems, infrastructure, exports and imports, and cultural/social values, or common microeconomic factors such as cost or product differentiation position, economies or scale/scope, and employee education and motivation as determinants of competitiveness. However, there is very little conceptual or theoretical literature, explicitly dealing with the influence of managers personal objectives such as power, status, perquisite seeking and risk reduction on corporate strategy and hence on firm competitiveness. This paper offers a first attempt to focus on ownership structure and management entrenchment (self-serving, risk-avoidance, and short term commitment) as the key factors that contribute to or impede firm competitiveness. Using parametric and non parametric tests on a sample of 600 Canadian listed firms, the study implications point to the influence of blockholders in reducing management waste, preventing asymmetric information, and obtaining more cash distributions in an effort to ensure efficiency and positively affect the strategic development of a firm.