WHAT DETERMINES CORPORATE OWNERSHIP CONCENTRATION AROUND THE WORLD?

This paper extends Demsetz and Lehn’s (1985) results and studies the determinants of corporate ownership concentration across countries in light of Qu’s (2004) model using a newly constructed dataset of 1,070 publicly traded stock companies from 45 countries. Estimation results show that ownership concentration varies systematically with respect to certain firm-specific economic variables and country characteristics in ways that are consistent with value maximization and predictions of agency theory. After controlling for firm-level determinants such as size, auditing practice, return rate, etc., ownership concentration is significantly lower in countries with more developed stock market and more effective investor protection.