THE ROLE OF LARGE SHAREHOLDERS IN FIRM PROFITABILITY: EVIDENCE FROM SPANISH LISTED FIRMS
Laura Cabeza-García, University of León (Spain); Silvia Gómez-Ansón, University of Oviedo (Spain); María Sacristán-Navarro, Rey Juan Carlos University (Spain)
Abstract
Our paper aims to contribute to the corporate governance literature mechanisms by studying the determinants of ownership held by the large shareholders and whether they enhance firms’ profitability. For a sample of Spanish listed companies within the period 2003-2008, we find that firms’ performance, risk and industry help explain differences in the percentage of shares hold by the largest/ultimate owner of listed firms. Besides, after controlling for the endogeneity of ownership structure, the results do not seem to support a significant effect of the holdings of the largest shareholder on firms’ profitability, but they do suggest that the presence of a second large shareholder may limit the private benefits of control of the largest shareholder and enhance firm profitability.