Majority Shareholder Motives of Changing Ownership Stake in US Companies

This research is devoted to the investigation of the majority shareholders’ ownership stake changes’ effects on the companies governance system and their performance. Significance of the study conducted is in fact that there were sufficient shifts in the ownership stakes of the majority shareholders in the USA: while in 1999 ownership was mostly concentrated, in 2009 more than 95% of the owners had enough shares to become a blockholders. In this study, we investigate how the changes in majority shareholders’ ownership share affect the quality of the corporate governance basing on their motives and incentives revealed from a broad body of literature. Moreover, we examine whether there are any statistically proved changes in firm performance because of the changes in the corporate governance level and the ownership stake. Concentrated ownership may provoke a rise in the severity of the agency conflicts within the firm what leads to the negative effects on the firm efficiency level. Corporate governance and severity of the principal-principal conflict indexes were builded. We focused on 4 most common types of investor in the USA: traditional investment managers, hedge funds, private equity and venture capital firms and individual investors. It was founded that causality between the corporate governance level, firm performance and the ownership stake of the largest majority shareholder depends on the type of investors.