part 5

[Audio] Control transfers in higher education institutions vary significantly across countries. Empirical evidence suggests that control can be contestable and result in large control premia for target shareholders. However the source of these premia remains unclear. Further research is required to fully understand the underlying factors. Control premia have risen from 20% in mid-1998 to 54% in December 1999 in Germany. In Finland control premia have dropped from 100% in the 1980 seconds to less than 5% today. Similarly in Sweden control premia have declined from 12% in the late 1980 seconds to less than 1% today and in Denmark from 30% to 2%. In Norway the differential was actually negative in 1990-93 but has risen to 6.4% in 1997. In blockholder systems hostility can take the form of hostile stakes and control is completely or partially transferred through block sales. Control premiums vary between -4% and 65% depending on the country and the specific circumstances of the transaction. In countries with a mandatory bid rule control transfers must be partial. A control block cannot be sold without making an offer to the minority shareholders. Only block sales below the mandatory bid price are allowed. This can have significant implications for the ownership and governance of these institutions. In conclusion the contested transfer of control in higher education institutions is a complex and multifaceted issue that requires further research and analysis. While the empirical evidence suggests that control can be contestable and result in large control premia for target shareholders the source of these premia remains unclear. Further research is needed to fully understand the underlying factors and to develop effective strategies for managing and mitigating the risks associated with control transfers in higher education..

[Audio] We present evidence suggesting that takeover defenses can increase control premia for target shareholders. Discuss the source of these premia and the need for further research to understand the underlying factors. Explore shareholder rights and institutional differences that make it challenging to compare large shareholders' actions and effects across countries or firms. Discuss the role of corporate law charters and securities regulations in limiting large shareholders' powers and the challenges of comparability across governance systems..

[Audio] We will discuss the role of control thresholds in corporate charters and their impact on control premia for target shareholders. In Germany employees have the power to appoint half of the board members in large corporations while in the UK the London Stock Exchange's listing requirements restrict the right of blockholders to appoint directors to the board. Some Anglo-Dutch corporations grant exclusive rights to nominate directors for election or to veto their removal to special classes of shares. Initiation rights also vary greatly across jurisdictions. In the US boards are generally shielded from direct shareholder influence and shareholders have limited opportunities to initiate fundamental transactions like mergers. In contrast shareholder proposals can force mergers or charter amendments if they receive a majority vote in the UK Japan or France. Ratification rights have been found to be less effective in countries where entrenchment is likely to be prominent such as the US..

[Audio] Our research highlights the challenges in corporate governance that arise from ownership dispersion. Large investors can enhance corporate performance but they can also misuse their voting power and engage in opportunistic behavior. Activism or shareholder intervention can also have both positive and negative effects on corporate performance. Share blocks can affect the liquidity of a stock and the stability of the stock market. To better understand the factors contributing to the rise of ownership dispersion and its effects on corporate performance further investigation is required..

[Audio] The research on control transfers in corporations will be discussed. Examining the number of shareholders from 1900 to 1923 and its consequences for voting control. The Means (1930) test will be examined that showed new owners of modern corporations no longer controlled the company through ownership but rather through large investors. This hypothesis is widely accepted in the U-S and the UK but other studies found that blockholders did not disappear entirely. In recent times research confirmed blocks are rare in the US but in the UK large institutional investors wield substantial voting power in most listed companies. This demonstrates the contestability of control in corporations and potential for large control premia for target shareholders. However the source of these premia remains unclear and more research is needed to understand underlying factors. Corporations and investors should be aware of potential risks and take steps to mitigate them. The presentation will explore these issues in subsequent slides..

[Audio] It is important for teachers in higher education to understand the underlying factors that contribute to large control premia for target shareholders. One source of measurement error is disclosure rules which can significantly affect the results obtained using methods such as Gordon (1940) Florence (1947) and Eisenberg (1976). Modern securities regulation is beginning to address this problem at least in Europe. In countries where corporations issue bearer shares information about shareholdings is generally not available making it difficult for researchers to study ownership concentration. Therefore it is important to be aware of these issues when interpreting research on shareholder concentration..

[Audio] We will discuss the relationship between ownership voting control and corporate performance. Four generations of empirical studies have examined this proposition. The first generation of studies focused on free-riding among dispersed shareholders leading to inferior company performance. The second generation of studies examined the impact of shareholder control on company performance focusing on the ability of shareholders to intervene and exercise control over management when necessary. The third generation of studies examined the role of anti-takeover rules and amendments in limiting shareholder intervention often restricting the ability of shareholders to intervene even when a large investor is present. The fourth generation of studies looked at the impact of dynamic measures of concentration based on power indices addressing some of the issues raised by static measures of concentration but considered in only a few studies. These empirical studies provide evidence that ownership and voting control can have a significant impact on corporate performance but the source of the control premia remains unclear and further research is needed to fully understand the underlying factors..

[Audio] 1. The empirical evidence and practice related to control dummy in the context of ownership concentration in firms suggest that the control dummy was not significant in most regressions. 2. The hypothesis that greater dispersion results in lower performance was rejected in surveys by Short 1994 and Gugler 2001. 3. The method was also applied in other countries finding that owner-controlled firms performed significantly better than manager-controlled firms in the U K and profitability was higher with family control in France. 4. The literature on the relationship between ownership concentration and market capitalization has shown a hump-shaped relationship with some evidence of a relationship between inside ownership by managers and market capitalization. 5. The value of corporate votes literature uses Shapley values and other power indices to measure the value of corporate control..

[Audio] Corporate performance is influencing managerial ownership but the impact is not significant. We consider an alternative approach using institutional variables such as co-operatives with many members. However this study may suffer from biases such as sample selection and missing variables. The fourth generation study adds missing variables such as legal system and voting rights held in excess of cash-flow rights but no effects are found for European countries and a negative effect is observed in Asia. La Porta and others (1999b) did not find significant effects of cash-flow rights and legal system on corporate valuation. It appears that a fifth generation study will be required to address the econometric problems of the fourth generation..

[Audio] This slide discusses the relationship between secondary market liquidity and shareholder dispersion. Evidence suggests that the number of shareholders affects liquidity even after controlling for other factors. This relationship is well-documented starting with Demsetz’s (1968) classic study and supported by subsequent research. An increase in the number of shareholders generally leads to higher liquidity while an increase in ownership concentration or a decrease in the ‘free float’ can result in lower liquidity. More liquid stocks command a price premium and offer a lower risk-adjusted return reducing the cost of capital for the company. This provides evidence for the existence of a monitoring liquidity tradeoff where companies have a measurable incentive to increase the number of shareholders to monitor their performance more effectively. However the role of liquidity in spurring monitoring has not been empirically explored and further research is required to fully understand the underlying factors. Control transfers have varied significantly across countries but empirical evidence suggests that control can be contestable and result in large control premia for target shareholders. However the source of these premia remains unclear and further research is required to fully understand the underlying factors..

[Audio] Control transfers can have a significant impact on target shareholders. Empirical evidence suggests that control can be contestable and result in large control premia for target shareholders. However the source of these premia remains unclear and further research is required to fully understand the underlying factors..

[Audio] We will discuss the influence of banks on economic growth and the impact of control on target shareholders. Empirical evidence suggests that control can be contestable and result in large control premia for target shareholders. However the source of these premia remains unclear and further research is required to fully understand the underlying factors. Banks play a role in corporate governance even if they hold no equity and have no board links due to their ability to collect information about customers and renegotiate loans. Relationships last from 7 to 30 years on average depending on the country and sample. Relationships last longer when the board seats. Lenders are discouraged from appointing directors because of concerns about conflicts of interest and liability during financial distress. Banks have been identified as an important driver of economic growth and for overcoming economic backwardness a view that has been challenged recently. Relationship banking emphasizes the special nature of the business relationship between banks and industrial clients..

[Audio] Firms often have multiple banking relationships and changes in these relationships can have a significant impact on stock prices. For example loan agreements are associated with positive abnormal returns while private placements or public issues have no or negative effects. Loan commitments can also have a positive stock price reaction especially when usage fees are involved. Acquisitions financed by bank loans are associated with positive bidder announcement returns especially when information asymmetries are important. However proxy fights which occur on average 17 times a year in the period from 1979-94 have no significant impact on stock prices. For large firms the median number of bank relationships is around 14 although this can vary across countries. Further research is needed to understand the underlying factors contributing to the large control premia for target shareholders in control transfers..

[Audio] Control transfers in higher education refer to the transfer of control from one group or individual to another. This transfer can occur in various forms such as mergers acquisitions spin-offs and joint ventures. The concept of control transfers in higher education has been extensively studied in the literature with empirical evidence suggesting that the transfer of control can have significant impacts on the performance and profitability of the institution. Control transfers are contestable and result in large control premia for target shareholders. Proxy fights are usually brought by minority shareholders with substantial holdings such as the U S In other countries with dispersed shareholdings proxy fights are very rare. The latest evidence suggests that proxy fights provide a degree of managerial disciplining and enhance shareholder value. Gains in shareholder wealth are associated with contest related acquisitions and restructuring under new management. After the decline in hostile takeovers in the U S at the beginning of the 1990s shareholder activism has been identified as a promising new avenue for overcoming the problems of dispersed holdings and a lack of major shareholders. Typical forms of activism are shareholder proposals “focus lists” of poor performers letter writing and other types of private negotiations. Typical activist issues are calls for board reforms the adoption of confidential voting and limits on excessive compensation. The empirical evidence on shareholder activism in the United States has been surveyed by Black (1998) Gillan and Starks (1998) Karpoff (1998) and Romano (2001). This development is closely related to the size of pension funds in the U S the largest in the O-E-C-D..

[Audio] When discussing executive compensation in higher education institutions it is important to consider the varying control transfers across countries. Empirical evidence suggests that control can be contestable resulting in large control premia for target shareholders. However the source of these premia remains unclear and further research is required to fully understand the underlying factors. One way in which control can be contested is through shareholder activism which has been a focus in the US. In the US shareholders can file proposals that are put to a vote at shareholder meetings but these proposals are not binding for the board or management. In contrast in countries where shareholder activism is not widespread such as Japan the board and management have more control over executive compensation decisions..

[Audio] We will examine the impact of control transfers on target shareholders and the potential for control premia. We will explore the relationship between empirical evidence and practice and how institutional factors such as agency problems institutional activism and shareholder suits can influence control. We will examine the differences in institutional capabilities coordination costs and incidence of shareholder litigation in various countries. We will discuss the misaligned incentives of money managers and the preference for liquidity as well as the uncertain benefits of intervention. We will examine the impact of conflicts of interest and looting of pension fund assets on the collapse of Maxwell media empire in the U K We will also discuss the differences in procedure and financial incentives for derivative and direct litigation..

[Audio] Shareholder suits benefit from lawyers and shareholders. Litigation does not discipline managers. Suits both help and hinder other types of monitoring. In 90% of settled suits lawyers are awarded fees. Derivative suit recoveries are only half as large as direct action and the direct action recovery goes to shareholders not the company. Shareholder suits limit self-dealing but discourage block holding (Black 1990)..

[Audio] Boards are vital for corporate governance and their structure and composition vary across countries. While the O-E-C-D Principles outline the duties of boards recent surveys emphasize the significance of independent directors in preventing management or shareholder capture. However boards may be more or less captured or controlled by such interests and their role in corporate decision-making may differ. Despite these variations there is a consensus that boards play a critical role in ensuring effective corporate governance and transparency..

[Audio] Rewritten text without greetings sentences: Discussed the empirical evidence and practice related to board independence. Examined the criteria for measuring the degree of board independence including the presence of the C-E-O as chairman of the board the proportion of independent directors on the board and the staffing of board committees. Examined the exact definition of “independent” and the constant debate surrounding the topic. Discussed the comprehensive discussion of the role of boards in a comparative perspective by Hansmann and Kraakman (2001). Studied some research that investigated the relationship between board size and performance. Provided a better understanding of the role of boards in corporate control..