New Perspectives on the Modern Corporation series
Edited by Per-Olof Bjuggren and Dennis C. Mueller
Chapter 11: Contracting Around Ownership: Shareholder Agreements in France
1 Camille Madelon and Steen Thomsen 1. INTRODUCTION A wealth of studies in economics, strategy and finance have examined the relationship between corporate ownership structure and performance (Hill and Snell, 1988, 1989; Holderness and Sheehan, 1988; McConnell and Servaes, 1990; Gedajlovic and Shapiro, 1998, 2002; Thomsen and Pedersen, 2000; De Miguel et al., 2004; Anderson and Reeb, 2003; Villalonga and Amit, 2006). Other studies have examined the effect of ownership structure on strategic decisions (Amihud and Lev, 1981; Hill and Snell, 1988, 1989; Graves, 1988; Baysinger et al., 1991; Lane et al., 1998; Denis et al., 1997, 1999; Allen and Phillips, 2000; David et al., 2001; Hoskisson et al., 2002; Lee and O’Neill, 2003; Desai et al., 2004; Lerner and Rajan, 2006; Mathews, 2006). Overall, this literature finds that corporate ownership structures matter to company behavior and value creation (for example, Shleifer and Vishny, 1997). Yet, there is a distinction to be made between the publicly observable formal ownership structure and what we are tempted to call the real ownership structure, namely the allocation of control, cash flow, and transfer rights, which results from implicit or explicit contracting among the various owners. Take for example Publicis, the world’s fourth largest communication group. The formal ownership structure points to two large owners in 2006: Dentsu, a Japanese based communication group, with circa 15 per cent of the equity, and Mrs Badinter, the founder’s daughter with 10 per cent of the equity. However, a closer look reveals a different picture. In 2002,...
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