Equity sales in Belgian corporate groups: expropriation on minority shareholders?
Faculty of Applied Economics
Antwerp :UA, 2001
Research paper / Faculty of Applied Economics UFSIA-RUCA ; 2001:034
University of Antwerp
In Belgian corporate groups, complex pyramidal structures and interlocking ownership lead to separation of ownership and control. This may generate incentives for the controlling shareholder to divert resources within the group through intragroup equity sales. This in turn could lead to significant private benefits at the expense of the minority shareholders. We test this hypothesis by investigating the stock price reaction to the announcement of equity sales in Belgian groups. Our results suggest that intragroup equity sales create value for minority shareholders. Equity sales between group members and non-group members do not seem to affect the value for minority shareholders in Belgian groups.