Ronagh, Saman (2024) Three Essays on Ownership Structure. PhD thesis, Concordia University.
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Abstract
This thesis examines three topics in ownership structure. In the first essay, we document a convex relationship between leverage and ownership of a firm’s largest individual blockholder. This convex influence of ownership on leverage is largely driven by the bankruptcy risk. Ownership has a concave impact on leverage through the threat of the market for corporate control and blockholder’s empire building desires. Further, we show that the ownership-leverage relationship differs depending on the blockholder’s identity (from a convex one for family firms to a concave one for non-family insider firms). Our results are robust to controlling for the endogeneity of ownership and alternative definitions of leverage.
In the second essay, we investigate the timing and determinants of investment in organization capital (OC). Using a comprehensive sample of U.S. IPOs, we document a significant decline in the investment in OC after going public. This decline is positively related to the dilution of the largest individual blockholders (a proxy for change in agency problems) and negatively related to IPO offer size (a proxy for access to capital). We also find that OC investment is positively related to family ownership and negatively related to venture capitalist presence, possibly because of their different investment horizon.
In the third essay, we examine the prevalence and importance of voting convertible preferred equity (CPE) in a comprehensive sample of US firms and find that around a half of CPE is voting and around seven percent have additional board election rights. In firms with voting CPE, holders of such shares control, on average, around 20% of votes (both on general corporate matters and on board elections). In firms with additional board control rights, CPE holders can elect more than a third of the board. We also investigate the determinants of the voting rights held by CPE holders and find that they are negatively related to individual common blockholder ownership and positively related to a firm's financial distress. We further show that additional board election rights have a positive impact on a firm’s survival. This positive influence is primarily driven by private equity firms as the largest CPE holder.
| Divisions: | Concordia University > John Molson School of Business > Finance |
|---|---|
| Item Type: | Thesis (PhD) |
| Authors: | Ronagh, Saman |
| Institution: | Concordia University |
| Degree Name: | Ph. D. |
| Program: | Business Administration (Finance specialization) |
| Date: | 19 April 2024 |
| Thesis Supervisor(s): | Paeglis, Imants |
| Keywords: | Ownership structure, capital structure, organization capital, IPO, convertible preferred equity |
| ID Code: | 994139 |
| Deposited By: | Saman Ronagh |
| Deposited On: | 24 Oct 2024 15:08 |
| Last Modified: | 24 Oct 2024 15:08 |
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