Ownership and Financing Structures of Listed and Large Non‐listed Corporations

• Author: Konstantinos Tzioumis,Stijn Claessens
• DOI: http://doi.org/10.1111/j.1467-8683.2006.00506.x
• Published date: 01 July 2006
• Date: 01 July 2006

266

CORPORATE GOVERNANCE

© 2006 The Authors

Journal compilation © 2006 Blackwell Publishing Ltd, 9600 Garsington Road,

Oxford, OX4 2DQ, UK and 350 Main St, Malden, MA, 02148, USA

Volume 14 Number 4 July 2006

Blackwell Publishing IncMalden, USA

CORGCorporate Governance: An International

Review0964-8410Blackwell Publishing Ltd. 2006

2006144••••ORIGINAL ARTICLES

OWNERSHIP

AND FINANCING STRUCTURES OF LISTED AND LARGE

NON-LISTED CORPORATIONSCOPRORATE GOVERNANCE

*Address for correspondence:

Konstantinos Tzioumis, Oper-

ations and Policy Department

(MC9-818), Financial Sector

Vice-Presidency, World Bank,

1818 H Street NW, Washington

DC 20433, USA. E-mail:

ktzioumis@worldbank.org

Ownership and Financing Structures

of Listed and Large Non-listed

Corporations

Stijn Claessens and Konstantinos Tzioumis*

In this paper, we use a large firm-level dataset covering 19 European countries in order to

compare the ownership and financing structures and performance of listed (LCs) and large

non-listed companies (NLCs). For the overall sample, we find that the substantial majority of

NLCs have either a large or medium blockholder. This contrasts with the ownership structure

of LCs, which usually have no large blockholder. Moreover, we present information on

typology of large blockholders as well as financial ratios in LCs and NLCs. The results from

matched-pairs analysis, employed in order to directly compare the two categories, suggest that

NLCs use relatively less fixed assets and they appear to be more capital intensive than LCs.

In terms of performance, NLCs have higher returns on assets and equity than LCs do, but

lower margins. Overall, the paper contributes to the understanding of differences between

NLCs and LCs.

Keywords: Ownership structures, financing structures

Introduction

here has been much emphasis given in

the last few years by policy makers and

the academic community to the corporate

governance issues of large, listed corporations

(LCs). In many countries though, the bulk of

economic activity is carried out by non-listed

firms (NLCs). Many of these NLCs are small

and, especially in developing countries, SMEs

account for the largest share of employment

and economic activity. However, in many

countries there is a sizable share of economic

activity conducted by large non-listed compa-

nies (NLCs). While comparable data are miss-

ing, these can vary from the Mittelstand in

Germany to the large suppliers of Japanese

multinationals or the chaebols in Korea.

The question arises whether these NLCs

face different corporate governance issues than

the LCs. Clearly, to the extent their ownership

structures are very different, we would expect

T

to find some differences in terms of corporate

governance mechanisms used. Often it will be

the case that management and ownership are

closely linked for NLCs, as in family con-

trolled firms, in which case the nature of the

principal-agent problems will be different

from that of large LCs with diffused owner-

ship structures and professional management.

In part related to differences in ownership

structures, there are likely variations as well in

the external financing structures of NLCs and

LCs. Being non-listed and possibly less open

in terms of financial information may mean

that NLCs rely more than LCs on bank financ-

ing. Besides ownership structure, we could

expect dissimilar corporate governance con-

siderations between LCs and NLCs since

NLCs operate in different types of business or

are of different size.

Whether all of these differences actually

exist and whether they reflect themselves in

the performance of firms are open questions,