Cross-ownership, takeover threat and control benefit

Daehwan Kim, Taeyoon Sung

Research output: Contribution to journalArticle

3 Citations (Scopus)

Abstract

This article critically examines two conventional ideas about cross-ownership: (1) it is almost impossible to takeover a cross-owned group of firms; (2) the controlling shareholder of a cross-owned group of firms extracts certain benefit from his/her control right. Through a simple analysis, we show that the amount of funds required to takeover a cross-owned group of firms is not necessarily bigger than the amount required to takeover a similar-sized stand-alone firm. Our analysis also indicates that the separation of control right and cash-flow right does not necessarily create extra benefit for the controller. Based on the analysis, we attempt to identify real barriers to the takeover of a cross-owned group of firms.

Original languageEnglish
Pages (from-to)659-667
Number of pages9
JournalApplied Financial Economics
Volume19
Issue number8
DOIs
Publication statusPublished - 2009 Jul 17

Fingerprint

Cross-ownership
Threat
Control rights
Cash flow rights
Controller
Controlling shareholders

All Science Journal Classification (ASJC) codes

  • Finance
  • Economics and Econometrics

Cite this

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Cross-ownership, takeover threat and control benefit. / Kim, Daehwan; Sung, Taeyoon.

In: Applied Financial Economics, Vol. 19, No. 8, 17.07.2009, p. 659-667.

Research output: Contribution to journalArticle

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